- 


THE    HISTORY 


PRESENT     TARIFF 


1860-1883 


BY 


F.    W.    ^TAUSSIG,    Ph.D. 

:AL  ECONOMY  n 


INSTRUCTOR    IN    POLITICAL    ECONOMV    IN   HARVARD   UNIVERSITY;    AUTHOR   OF        PROTECTION 
TO  YOUNG  INDUSTRIES,"  ETC. 


NEW    YORK    &    LONDON 

G.    P.    PUTNAM'S     SONS 

&Ije  $  nicker  boclur  ^rws 
1885 


o?  TIU&I 


COPYRIGHT   BY 

G.  P.  PUTNAM'S  SONS 
1885 


Press  of 

G.  P.  PUTNAM'S  SONS 
New  York 


CONTENTS. 


PAGE 

PREFACE  ..........         v 

LIST  OF  AUTHORITIES     .         .         .         .         .         .      -  .        ix 

CHAPTER  I. — The  War  Tariff i 

The  Tariff  before  the  War.— The  Morrill  Tariff  Act  of  1861.— 
Tax  and  Tariff  Act  of  1862. — Internal  Revenue  Act  of  1864. 
—Tariff  Act  of  1864.— Tariff  of  1864  is  the  Basis  of  the 
Existing  Tariff. 

CHAPTER  II. —  The  Failure  to   Reduce  the    Tariff  after 

the  War  <  .         .         .         .         .         .17 

Abolition  of  the  Internal  Taxes,  1866-72. — Failure  to  Reduce 
the  Tariff. — Unsuccessful  Tariff  Bill  of  1867. — Act  of  1870. — 
Situation  in  1872. — Reform  Bill  in  the  House. — Ten  per  Cent. 
Reduction  Proposed. — Policy  of  the  Protectionists. — Act  of 
1872. — Removal  of  the  Tea  and  Coffee  Duties,  1872. — Ten 
per  Cent.  Reduction  Repealed,  1875. 

CHAPTER  III. — How  Duties  were  Raised  Above  the  War 

Rates       .........       40 

Woollens  Act  of  1867. — The  Compensating  System. — Wool 
and  Woollens  Duties  of  1864. — Act  of  1867  :  Duty  on  Wool ; 
Duty  on  Woollen  Cloths  ;  Duty  on  Flannels,  Carpets,  Dress 
Goods,  etc. — Comment  on  the  ad-valorem  Duty. — Comment  on 
the  Specific  Duties. — The  Woollens  Act  a  Heavy  Protective 
Measure  in  Disguise. — Manufacturers  not  Benefited. — Copper 
Act  of  1869.— Steel  Rails,  1870.— Marble,  1864-70.— Other 
Examples. — Character  of  these  Measures, 
iii 


229724 


iv  CONTENTS. 

CHAPTER  IV.— Tariff  Act  0/1883  .         .       *.  76 

Tariff  Commission  of  1882.— Act  of  1883  ;  How  Passed.— 
Duties  Raised  in  1883  :  Woollen  D.ress  Goods,  Woollen  Cloths, 
Cotton  Goods,  Iron  Ore,  Steel,  Files,  ^Quicksilver. — This  In- 
crease of  Duties  not  Defensible. — Reductions  of  Duty  :  Wool, 
Woollens,  Cottons,  Iron,  Steel  Rails,  Copper,  Other  Articles, 
Wheat,  Corn,  etc. — General  Remarks. 

APPENDIX — TABLES  : 103 

I. — Imports  and  Duties,  1860-1883. 
II. — Duties  of  1 86 1  and  those  of  1864  which  were  retained, 

without  change,  till  1883. 

III. — Duties  raised  after  the  war  above  the  rates  of  1864. 
IV. — Revenue  from  internal  taxes  and  from  the  tariff,  1860- 

1883. 
V. — Product,  imports,  and  foreign  and    domestic  price  of 

copper,  1875-1883.    ' 
VI. — Product,  imports,  and  foreign   and  domestic  price  of 

steel  rails,  1871-1883. 
VII. — Changes  of  duty  by  the  act  of  1883. 

INDEX  .         .         .     i°9 


PREFACE. 


THIS  volume  is  intended  to  give  a  narrative  of  the 
growth  of  the  protective  system  which  now  exists  in  the 
United  States.  It  is  concerned  chiefly  with  the  obvious 
facts  in  the  history  of  tariff  legislation,  and  does  not  touch 
directly  the  more  important,  but  less  easy  questions  as  to  the 
economic  effect  of  that  legislation.  It  endeavors  to  state 
the  circumstanc£S^under_which  tji£variou^_tariff  actsjwere 
gassed,  the  causes  which  made  their  enactmenJLpossible, 
and  the  changes  of  duty  which  they  brought  about.  These 
bald  facts  may  be  familiar,  in  a  greater  or  less  degree,  to 
those  who  have  taken  an  interest  in  public  affairs  during 
the  last  twenty-five  years ;  but  they  are  little  known  and 
not  easily  learned  by  the  younger  generation  which  has 
grown  to  manhood  since  the  time  when  the  high  protective 
system  became  a  permanent  fixture.  Even  for  those  of 
the  older  generation  who  were  spectators  of  the  growth 
of  this  system,  it  may  be  of  service  to  point  out,  what  is 
not  always  clear  in  contemporary  events,  the  meaning  and 
connection  of  what  happened  under  their  eyes. 

No  complete  account  of  this  important  field  in  our  tariff 
history  has  been  given  to  the  public.  Professor  Sumner, 


vi  PREFACE. 

in  his  "  History  of  Protection,"  and  Professor  Perry,  in  the 
historical  chapters  of  his  "  Principles  of  Political  Economy," 
have  touched  on  it ;  but  their  accounts,  written  some  years 
ago,  are  necessarily  incomplete  so  far  as  they  apply  to  the 
existing  state  of  things.  The  same  is  true  of  Mr.  Wells's 
essay  on  the  "  Recent  Financial,  Industrial,  and  Economic 
Experience  of  the  United  States  "  (1872).  I  hope  that,  in 
giving  a  systematic  account  of  the  growth  of  the  present 
tariff  system  from  1860  to  1883,  I  have  added  something 
to  the  valuable  contributions  of  my  predecessors. 

The  history  of  the  protective  duties  alone  has  been  taken 
up  in  these  pages.  That  of  the  non-protective  duties  is 
in  many  ways  interesting  and  instructive  ;  but  I  have  spoken 
of  them  only  in  so  far  as  they  throw  light  on  the  main 
subject.  The  abolition  of  the  tea  and  coffee  duties  has 
been  discussed  at  some  length,  because  these  are  by  far 
the  most  important  of  the  non-protective  class,  and  be- 
cause their  removal  illustrates  very  clearly  the  process  by 
which  the  protective  duties  have  been  maintained.  The 
sugar  duties  have  not  been  considered  at  all ;  for,  though 
they  operate  as  protection  for  the  sugar  planters  of  Louis- 
iana, the  domestic  production  is  so  small,  in  comparison 
with  the  imports,  that  the  duty  must  be  considered,  on 
the  whole,  as  belonging  to  the  non-protective  class.  It 
certainly  stands  on  a  different  footing  from  the  mass  of 
the  protective  duties,  and  presents,  in  the  main,  a  different 
set  of  problems  for  solution. 

Although  this  volume,  as  I  have  said,  is  meant  mainly 


PREFACE.  Vll 

to  give  an  account  of  obvious  facts,  in  regard  to  which 
there  can  be  no  difference  of  opinion,  it  is  inevitable  that 
it  should  also  touch  on  the  disputed  points  in  the  protec- 
tion controversy.  While  I  have  studiously  tried  to 
prevent  my  opinions  from  distorting  in  any  way  the 
narrative,  I  have  not  thought  it  necessary  to  conceal  them. 
My  point  of  view  has  been  that  of  one  who  considers  the 
principle  of  protection  to  be  radically  unsound.  It  would 
be  going  too  far  to  say  that  every  argument  advanced  in 
favor  of  protection  is  quite  untenable.  But  the  reasoning 
on  which  the  general  principle  of  free  trade  is  based  seems 
to  me  unanswerable ;  and  for  the  United  States  the 
greatest  practicable  application  of  this  principle  is,  I  can- 
not but  be  convinced,  the  best  policy.  Within  what  limits 
the  greatest  practicable  application  lies,  need  not  here  be 
discussed.  It  is  certain  that,  in  the  present  economic 
condition  of  the  country  and  the  present  temper  of  the 
public,  some  degree  of  reform  will  take  place  in  the  not 
distant  future, — a  reform  of  which,  I  hope,  the  reasonable- 
ness will  be  made  somewhat  more  plain  by  these  pages. 

F.  W.  TAUSSIG. 

CAMBRIDGE,  MASS.,  Oct.,  1884. 


AUTHORITIES. 


Public  Documents. 

The  Congressional  Record  and  the  public  documents  have  been  cited  in 
the  text,  for  convenience,  by  date,  and  not,  according  to  the  usual  method,  by 
Congress  and  Session  ;  e.  g.,  Congressional  Record,  1869—70,  instead  of 
Congressional  Record,  4ist  Congress,  2d  Session. 

The  more  important  public  documents  bearing  on  recent  tariff  history 
are  : 

Special  Report  on  the  Statistics  of  Customs-Tariff  Legislation,  with 
tables  showing  the  rates  of  duty  on  each  article  from  1789  to  1870. 
House  Exec.  Doc.,  42d  Congr.,  2d  Session  (1871-72),  vol.  ix.,  No.  109, 
generally  cited  as  "Young's  Report." 

Compilation  on  the  tariff:  Senate  Documents,  Report  No.  12,  48th 
Congress,  ist  Session  (1883-84) ;  includes  in  its  tables  the  rates  of  duty  from 
1789  to  1883,  and  many  useful  statistics. 

Imports  and  Duties  from  1867  to  1883,  giving  the  imports  of  each  article 
in  each  year,  and  the  duties  collected.  House  Misc.  Doc. ,  48th  Congress, 
1st  Session  (1883-84),  No.  49. 

Report  of  the  United  States  Revenue  Commission  (Messrs.  David  A. 
Wells,  Stephen  Colwell,  and  S.  S.  Hayes).  House  Exec.  Doc.,  39th 
Congress,  ist  Session  (1865-66),  vol.  vii.,  No.  34. 

Mr.  Wells's  four  reports  as  Special  Commissioner  of  the  Revenue — 
namely  : 

First  Report,  Senate  Doc.,  3gth  Congress,  2d  Session  (1866-67),  v°l-  i-. 
No.  2. 

Second  Report,  House  Exec.  Doc.,  4Oth  Congress,  2d  Session  (1867-68), 
vol.  ix.,  No.  Si. 

Third  Report,  House  Exec.  Doc.,  4Oth  Congress,  3d  Session  (1868-69), 
vol.  vii.,  No.  1 6. 

Fourth  Report,  House  Exec.  Doc.,  4ist  Congress,  2d  Session  (1869-70), 
vol.  v.,  No.  27. 


X  AUTHORITIES, 

Report  of  the  Tariff  Commission  of  1882,  House  Misc.  Doc.,  47th  Con- 
gress, 2d  Session  (1882-83),  No.  6.  The  testimony  taken  by  the  Commission 
contains  a  mass  of  material  valuable  for  the  study  of  the  tariff. 

Mineral  Resources  of  the  United  States,  published  by  the  U.  S.  Geologi- 
cal Survey,  under  the  charge  of  Albert  Williams,  Jr.  Washington  :  Gov- 
ernment Printing  Office,  1883. 

Statistical  Abstract  of  the  United   States,  published  annually  since  1878. 

The  volume  of  the  Census  of  1880  on  Manufactures;  more  particularly 
the  special  reports  on  iron,  wool  and  woollens,  silks,  and  cottons. 

The  annual  reports  of  the  Secretary  of  the  Treasury,  of  the  Commissioner 
of  Internal  Revenue,  and  of  the  Comptroller  of  the  Currency  supply  much 
information  bearing  on  tariff  history. 

Other  Material. 

Heyl's  Import  Duties.  Though  not  an  official  publication,  it  is  used  by 
the  customs  officers.  Published  from  time  to  time  in  successive  editions. 

Transactions  of  the  National  Association  of  Wool  Manufacturers,  1865- 
'66  ;  containing  the  proceedings  of  the  Syracuse  Convention  of  1865,  and 
statements  of  the  wool  manufacturers  relative  to  the  proposed  duties  on 
wool  and  woollens  (1866). 

Bulletin  of  the  National  Association  of  Wool  Manufacturers  ;  published 
periodically  since  1869. 

Memorial  of  the  Manufacturers  of  Woollen  Goods  to  the  Committee  on 
Ways  and  Means.  By  Edward  Harris.  Washington,  1872.  Also  printed. 

The  Tariff,  and  How  it  Affects  the  Woollen  Cloth  Manufacture  and 
Wool-Growers.  By  Edward  Harris.  Woonsocket,  1871. 

Protective  Duties.     By  Edward  Harris.     Woonsocket,  1871. 

Wool  and  the  Tariff.  By  D.  A.  Wells.  A  letter  printed  in  the  N.  Y. 
Tribune, 'March  20,  1873.  Also  published  as  a  pamphlet. 

Annual,,  reports  of  the  American  Iron  and  Steel  Association.  By  James 
M.  Swank,  Secretary.  Published  annually  since  1871.  The  report  for 
1876  contains  a  history  of  the  iron  trade. 

The  Tariff  on  Iron  and  Steel  Justified  by  its  Results.  By  James  M. 
Swank.  Philadelphia,  1882.  (Published  by  the  American  Iron  and  Steel 
Association.) 

Reports  of  the  Silk  Association  of  America.  By  W.  C.  Wyckoff,  Secre- 
tary. Published  annually  since  1873. 

The  Silk  Goods  of  America.     By  W.  C.  Wyckoff.     New  York,  1880. 

The  Recent  Financial,  Industrial,  and  Commercial  Experiences  of  the 
United  States.  By  David  A.  Wells.  'Printed  in  Cobden  Club  Essays, 


A  UTHORITIES.  XI 

» . 

Second  series.  London,  1872.  Also  published  separately,  New  York, 
1872. 

Lectures  on  the  History  of  Protection.  By  W.  G.  Sumner.  New  York, 
1877. 

Elements  of  Political  Economy.  By  A.  L.  Perry.  Chapter  XV.  is  on 
tariff  history. 

The  Destructive  Influence  of  the  Tariff  on  Commerce  and  Manufactures. 
By  J.  Schoenhof.  New  York,  1884. 

Our  Unjust  Tariff  Law.     By  H.  L.  Nelson.     Boston,  1884. 

It  is  needless  to  say  that  this  list  does  not  exhaust  the  literature  of  the 
contemporary  protective  controversy  ;  but  it  states  the  more  important  pub- 
lications on  the  history  of  recent  tariff  legislation. 


THE  HISTORY  OF  THE  EXISTING  TARIFF. 


THE    WAR    TARIFF. 

EVERY  one  has  heard  of  our  "  war  tariff  "  and  of  our 
"  war  taxes."  Every  one  knows  that  our  tariff  is  con- 
nected in  some  way  with  the  series  of  extraordinary  finan- 
cial measures  which  the  Rebellion  called  out.  But  few 

• 

have  any  exact  knowledge  of  the  extent  to  which  our  ex- 
treme protective  system  is  due  to  the  war.  An  account 
of  the  way  in  which  the  tariff  was  put  into  its  present 
shape  will  show  how  the  exigencies  of  the  Civil  War 
caused  duties  to  be  greatly  increased  ;  how  these  high 
duties  were  retained  and  even  increased  in  an  unexpected 
and  indefensible  way ;  and  how  the  tariff,  as  it  now 
stands,  is  still,  in  the  main,  a  product  of  war  legislation. 
A  history  of  the  existing  tariff  is  simply  a  history  of  the 
way  in  which  the  war  duties  were  retained,  increased,  and 
systematized,  and  of  the  half-hearted  and  unsuccessful 
attempts  at  reduction  and  reform  which  have  been  made 
from  time  to  time. 


2  in  STORY  OF   TXE  'EXISTING  TARIFF. 

Before  the  war  we  had  a  tariff  of  duties  which,  though 
The  tariff  not  arranged  completely  or  consistently  on  the 
before  the  principles  of  free  trade,  was  yet  very  moderate 
in  comparison  with  the  existing  system.  For 
about  fifteen  years  before  the  Rebellion  began,  duties 
on  imports  were  fixed  by  the  acts  of  1846  and  1857. 
The  act  of  1846  had  been  passed  by  the  Democratic 
party  with  the  avowed  intention  of  putting  into  oper- 
ation, as  far  as  was  possible,  the  principles  of  free 
trade.  This  intention,  it  is  true,  was  by  no  means  car- 
ried out  consistently.  Purely  revenue  articles,  like  tea 
and  coffee,  were  admitted  free  of  duty;  and  on  the  other 
hand,  articles  like  iron  and  manufactures  of  iron,  cotton 
goods,  wool,  and  woollen  goods, — in  fact  most  of  the  im- 
portant articles  with  which  the  protective  controversy  has 
been  concerned, — were  charged  with  a  duty  of  thirty  per 
cent.  Other  articles  again,  like  steel,  copper,  lead,  were 
admitted  at  a  lower  duty  than  this,  not  for  any  reasons  of 
revenue,  but  because  they  were  not  then  produced  to  any 
-  extent  within  the  country,  and  because  protection  for 
•'  them  in  consequence  was  not  asked.  Protection  was  by 
no  means  absent  from  the  act  of  1846  ;  and  the  rate  of 
thirty  per  cent.,  which  it  .imposed  on  the  leading  articles, 
would  be  supposed,  in  almost  any  civilized  country,  to 
give  even  a  high  degree  of  protection.  Nevertheless,  the 
tariff  of  1846  was,  in  comparison  with  the  present  tariff,  a 
moderate  measure ;  and  a  return  to  its  rates  would  now 
be  considered  a  great  step  of  reform  by  those  who  are  op- 


THE  WAR  TARIFF.  3 

posed  to  protective  duties.  The  act  of  1857  took_away 
still  more  from  the  restrictive  character  of  our  tariff  legis- 
lation. Congress,  it  may  be  remarked,  acted  in  1857  with 
reasonable  soberness  and  impartiality,  and  without  being 
influenced  by  political  considerations.  The  maximum 
protective  duty  was  reduced  to  twenty-four  per  cent. ; 
many  raw  materials  were  admitted  free ;  anoTthe  level  of 
duties  on  the  whole  line  of  manufactured  articles  was 
brought  down  to  the  lowest  point  which  has  been  reached 
in  this  country  since  181$.  It  is  not  likely  we  shall  see, 
for  a  great  many  years  to  come,  a  nearer  approach  to  the 
free-trade  ideal. 

The  country  accepted  the  tariff  acts  of  1846  and  1857, 
and  was  satisfied  with  them.  Except  in  the  years  imme- 
diately following  the  passage  of  the  former  act,  when 
there  was  some  attempt  to  induce  a  return  to  a  more 
rigid  protective  system,  agitation  on  the  tariff  ceased 
almost  entirely.  There  is  no  doubt  that  the  period  from 
1846  to  1860  was  a  time  of  great  material  prosperity,  in- 
terrupted, but  not  checked,  by  the  crisis  of  1857.  ^ 
would  be  going  too  far  to  assert  that  this  general  pros- 
perity was  due  chiefly  to  the  liberal  character  of  the  tariff. 
Other  causes  exercised  a  great  and  perhaps  a  predominant 
influence.  But  the  moderate  tariff  undoubtedly  was  one 
of  the  elements  that  contributed  to  the  general  welfare. 
It  may  be  well  to  add  that  prosperity  was  not  confined  to 
any  part  of  the  country,  or  to  any  branches  of  industry. 
Manufactures  in  general  continued  to  flourish  ;  and  the 


4  HISTORY  OF  THE  EXISTING  TARIFF. 

reduction  of  duties  which  was  made  in  1857  had  the  con- 
sent and  approbation  of  the  main  body  of  the  manufac- 
turing class. 

The  crisis  of  1857  had  caused  a  falling  off  in  the  reve- 
nue from  duties.  This  was  made  the  occasion  for  a  reac- 
tion from  the  liberal  policy  of  1846  and  1857.  ^n  I86i 
the  Morrill  tariff  act  began  a  change  toward  a  higher  range 
of  duties  and  a  stronger  application  of  protection.  The 
Morrill  act  is  often  spoken  of  as  if  it  were  the  basis  of  the 
present  protective  system.  But  this  is  by  no  means  the 
The  Morrill  case-  The  tariff  act  of  1861  was  passed  by  the 

tariff  act  House  of  Representatives  in  the  session  of 
1859-60,  the  session  preceding  the  election  of 
President  Lincoln.  It  was  passed,  undoubtedly,  with 
the  intention  of  attracting  to  the  Republican  party, 
at  the  approaching  Presidential  election,  votes  in  Penn- 
sylvania and  other  States  that  had  protectionist  lean- 
ings. In  the  Senate  the  tariff  bill  was  not  taken 
up  in  the  same  session  in  which  it  was  passed  in  the 
House.  Its  consideration  was  postponed,  and  it  was  not 
until  the  next  session — that  of  1860— 6 1 — that  it  received 
the  assent  of  the  Senate  and  became  law.  It  is  clear  that 
the  Morrill  tariff  was  carried  in  the  House*  before  any 
serious  expectation  of  war  was  entertained ;  and  it  was 
accepted  by  the  Senate  in  the  session  of  1861  without 
material  change.  It  therefore  forms  no  part  of  the  finan- 
cial legislation  of  the  war,  which  gave  rise  in  time  to  a 
series  of  measures  that  entirely  superseded  the  Morrill 


THE  WAR  TARIFF.  5 

tariff.  Indeed,  Mr.  Morrill  and  the  other  supporters  of 
the  act  of  1861  declared  that  their  intention  was  simply 
to  restore  the  rates  of  1846.  The  important  change 
which  they  proposed  to  make  from  the  provisions  of  the 
tariff  of  1846  was  to  substitute  specific  for  ad-valor  cm 
duties.  Such  a  change  from  ad-valorem  to  specific 
duties  is  in  itself  by  no  means  objectionable ;  but  it  has 
usually  been  made  a  pretext  on  the  part  of  protectionists 
for  a  considerable  increase  in  the  actual  duties  paid. 
When  protectionists  make  a  change  of  this  kind,  they 
almost  invariably  make  the  specific  duties  higher  than  the 
ad-valorem  duties  for  which  they  are  supposed  to  be  an 
equivalent, — a  circumstance  which  has  given  rise  to  the 
common  notion,  of  course  unfounded,  that  there  is  some 
essential  connection  between  free  trade  and  ad-valorem 
duties  on  'the  one  hand,  and  between  protection  and 
specific  duties  on  the  other  hand.  The  Morrill  tariff 
formed  no  exception  to  the  usual  course  of  things  in  this 
respect.  The  specific  duties  which  it  established  were  in 
many  cases  considerably  above  the  ad-valorem  duties  of 
1846.  The  most  important  direct  changes  made  by  the 
act  of  1861  were  in  the  increased  duties  on  iron  and  on 
wool,  by  which  it  was  hoped  to  attach  to  the  Republican 
party  Pennsylvania  and  some  of  the  Western  States. 
Most  of  the  manufacturing  States  at  this  time  still  stood 
aloof  from  the  movement  toward  higher  rates.1 

1  Mr.  Rice,  of  Massachusetts,  said  in  1860  :   "  The  manufacturer  asks  no 
additional  protection.     He  has  learned,  among  other  things,  that  the  great- 


6  HISTORY  OF  THE  EXISTING  TARIFF. 

Hardly  had  the  Morrill  tariff  act  been  passed  when 
Fort  Sumter  was  fired  on.  The  Civil  War  began.  The 
need  of  additional  revenue  for  carrying  on  the  great  strug- 
gle was  immediately  felt ;  and  as  early  as  the  extra  session 
of  the  summer  of  1861,  additional  customs  duties  were 
imposed.  In  the  next  regular  session,  in  December,  1861, 
a  still  further  increase  of  duties  was  made.  From  that 
time  till  1865  no  session,  indeed,  hardly  a  month  of  any 
session,  passed  in  which  some  increase  of  duties  on  im- 
ports was  not  made.  During  the  four  years  of  the  war 
every  resource  was  strained  for  carrying  on  the  great 
struggle.  Probably  no  country  has  seen,  in  so  short  a 
time,  so  extraordinary  a  mass  of  financial  legislation.  A 
huge  national  debt  was  accumulated ;  the  mischievous 
expedient  of  an  inconvertible  paper  currency  was  resorted 
to ;  a  national  banking  system  unexpectedly  arose  from 
the  confusion  ;  an  enormous  system  of  internal  taxation 
was  created  ;  the  duties  on  imports  were  vastly  increased 
and  extended.  We  are  concerned  here  only  with  the 
change  in  the  tariff ;  yet  it  must  be  borne  in  mind  that' 

est  evil,  next  to  a  ruinous  competition  from  foreign  sources,  is  an  excessive 
protection,  which  stimulates  a  like  ruinous  and  irresponsible  competition  at 
home," — Congress.  Globe,  1859-60,  p.  1867.  Mr.  Sherman  said:  "When 
Mr.  Stanton  says  the  manufacturers  are  urging  and  pressing  this  bill,  he 
says  what  he  must  certainly  know  is  not  correct.  The  manufacturers  have 
asked  over  and  over  again  to  be  let  alone.  The  tariff  of  1857  is  the  manu- 
facturers' bill ;  but  the  present  bill  is  more  beneficial  to  the  agricultural  in- 
terest than  the  tariff  of  1857." — Ibid.,  p.  2053.  Cf.  Hunter's  Speech, 
Ibid.,  p.  3010.  In  later  years  Mr.  Morrill  himself  said  that  the  tariff  of 
1861  "  was  not  asked  for,  and  but  coldly  welcomed,  by  manufacturers,  who 
always  and  justly  fear  instability." — Congr.  Globe,  1869-70,  p.  3295. 


THE  WAR  TARIFF.  J 

these  changes  were  only  a  part  of  the  great  financial  meas- 
ures which  the  war  called  out.  Indeed,  it  is  impossible  to 
understand  the  meaning  of  the  changes  which  were  made 
in  the  tariff  without  a  knowledge  of  the  other  legislation 
that  accompanied  it,  and  more  especially  of  the  extended 
system  of  internal  taxation  which  was  adopted  at  the 
same  time.  To  go  through  the  various  acts  for  levying 
internal  taxes  and  imposing  duties  on  imports  is  not  neces- 
sary in  order  to  make  clear  the  character  and  bearing  of 
the  legislation  of  the  war.  It  will  be  enough  to  describe 
those  that  are  typical  and  important.  The  great  acts  of 
1862  and  1864  are  typical,  of  the  whole  course  of  the  war 
measures ;  and  the  latter  is  of  particular  importance, 
because  it  became  the  foundation  of  the  existing  tariff 
system. 

It  was  not  until  1862  that  the  country  began  to  appre- 
ciate how  great  must  be  the  efforts  necessary  to  suppress 
the  Rebellion,  and  that  Congress  set  to  work  in  earnest  to 
provide  the  means  for  that  purpose.  Even  in  1862  Con- 
•gress  relied  more  on  selling  bonds  and  on  issuing  paper- 
money  than  on  immediate  taxation.  But  Tax  and 
two  vigorous  measures  were  resorted  to  for  tariff  acts  of 
taxing  the  people  immediately  and  directly. 
The  first  of  these  was  the  internal  revenue  act  of 
July  I,  1862.  This  established  a  comprehensive  system 
of  excise^  taxation.  Specific  taxes  were  imposed  on 
the  production  of  iron  and  steel,  coal-oil,  paper,  leather, 
and  other  articles.  A  general  ad-valorem  tax  was 


8  HISTORY  OF  THE  EXISTING  TARIFF. 

imposed  on  other  manufactures.  In  addition,  licenses 
were  required  in  many  callings.  A  general  income  tax 
was  imposed.  Railroad  companies,  steamboats,  express 
companies  were  made  to  pay  taxes  on  their  gross  receipts. 
Those  who  have  grown  to  manhood  within  the  last  fifteen 
years  find  it  difficult  to  imagine  the  existence  and  to  ap- 
preciate the  burden  of  this  heavy  and  vexatious  mass  of 
taxation ;  for  it  was  entirely  swept  away  within  a  few 
years  after  the  end  of  the  war. 

The  second  great  measure  of  taxation  to  which  Con- 
gress turned  at  this  time  was  the  tariff  act  of  July  14, 
1862.  The  object  of  this  act,  as  was  stated  by  Messrs. 
Morrill  and  Stevens,  who  had  charge  of  its  passage  in  the 
House,  was  primarily  to  increase  duties  only  to  such  an 
extent  as  might  be  necessary  in  order  to  offset  the  inter- 
nal taxes  of  the  act  of  July  1st.1  But  although  this  was  the 
chief  object  of  the  act,  protective  intentions  were  enter- 
tained by  those  who  framed  it,  and  were  carried  out. 
Both  Messrs.  Morrill  and  Stevens  were  avowed  protec- 
tionists, and  did  not  conceal  that  they  meant  in  many 
cases  to  help  the  home  producer.  The  increase  of  duties 
on  articles  which  were  made  in  this  country  was  therefore, 

1  Mr.  Morrill  said,  in  his  speech  introducing  the  tariff  bill  :  "It  will  be 
indispensable  for  us  to  revise  the  tariff  on  foreign  imports,  so  far  as  it  may 
be  seriously  disturbed  by  any  internal  duties,  and  to  make  proper  repara- 
tion. *  *  *  If  we  bleed  manufacturers,  we  must  see  to  it  that  the  proper 
tonic  is  administered  at  the  same  time." — Congr.  Globe,  1861-62,  p.  1196. 
Similarly  Mr.  Stevens  said :  "We  intended  to  impose  an  additional  duty 
on  imports  equal  to  the  tax  which  had  been  put  on  the  domestic  articles.  It 
was  done  by  way  of  compensation  to  domestic  manufacturers  against  foreign 
importers." — Ibid.,  p.  2979. 


THE  WAR  TARIFF.  9 

in  all  cases,  at  least  sufficient  to  afford  the  domestic  pro- 
ducers compensation  for  the  internal  taxes  which  they  had 
to  pay.  In  many  cases  it  was  more  than  sufficient  for  this 
purpose,  and  brought  about  a  distinct  increase  of  protec- 
tion. Had  not  the  internal  revenue  act  been  passed, 
affording  a  good  reason  for  some  increase  of  duties ;  had 
not  the  higher  taxation  of  purely  revenue  articles,  like 
tea  and  coffee,  been  a  justifiable  and  necessary  expedient 
for  increasing  the  government  income ;  had  not  the 
increase  even  of  protective  duties  been  quite  defensible  as 
a  temporary  means  for  the  same  end  ;  had  not  the  general 
feeling  been  in  favor  of  vigorous  measures  for  raising  the 
revenue ; — had  these  conditions  not  existed,  it  would  have 
been  very  difficult  to  carry  through  Congress  a  measure 
like  the  tariff  of  1862.  But,  as  matters  stood,  the  tariff 
was  easily  passed.  Under  cover  of  the  need  of  revenue 
and  of  the  intention  to  prevent  domestic  producers  from 
being  unfairly  handicapped  by  the  internal  taxes,  a  clear 
increase  of  protection  was  in  many  cases  brought  about. 
The  war  went  on ;  still  more  revenue  was  needed. 
Gradually  Congress  became  convinced  of  the  necessity  of 
resorting  to  still  heavier  taxation,  and  of  the  willingness 
of  the  country  to  pay  all  that  was  necessary  to  maintain 
the  Union.  Passing  over  less  important  acts,  we  have  to 
consider  the  great  measure  that  was  the  climax  of  the 
financial  legislation  of  the  war.  The  three  revenue  acts 
of  June  30,  1864,  practically  form  one  measure,  and  that 
probably  the  greatest  measure  of  taxation  which  the 


10  HISTORY  OF  THE  EXISTING  TARIFF. 

world  has  seen.     The   first  of   the  acts  provided  for  an 
enormous   extension    of    the    internal-tax   system  ;     the 
second  for  a  corresponding  increase  of  the  duties  on  im-   • 
ports ;  the  third  authorized  a  loan  of  $400,000,000. 

The  internal  revenue  act  was  arranged,  as  Mr.  David 
Internal  ^'  Wells  has  said,  on  the  principle  of  the 
revenue  act,  Irishman  at  Donnybrook  fair;  "  Whenever  you 
see  a  head,  hit  it  ;  whenever  you  see  a  com- 
modity, tax  it."  Every  thing  was  taxed,  and  taxed 
heavily.  Every  ton  of  pig-iron  produced  was  charged  two 
dollars ;  every  ton  of  railroad  iron  three  dollars ;  sugar 
paid  two  cents  a  pound  ;  salt,  six  cents  a  hundred-weight. 
The  general  tax  on  all  manufactures  produced  was  five 
per  cent.  But  this  tax  was  repeated  on  almost  every 
article  in  different  stages  of  production.  Raw  cotton,  for 
instance,  was  taxed  two  cents  a  pound  ;  as  cloth,  it  again 
paid  five  per  cent.  Mr.  Wells  estimates  that  the  govern- 
ment in  fact  collected  between  eight  and  fifteen  per  cent, 
on  every  finished  product.  Taxes  on  the  gross  receipts  of 
railroad,  steamboat,  telegraph,  express,  and  insurance 
companies  were  levied,  or  were  increased  where  already  in 
existence.  The  license-tax  system  was  extended  to 
almost  every  conceivable  branch  of  trade.  The  income 
tax  was  raised  to  five  per  cent,  on  moderate  incomes,  and 
to  ten  per  cent,  on  incomes  of  more  than  $10,000.  r 
Tariff  act  of  The  tariff  act  of  1864,  passed  at  the  same  time 
1864.  with  the  internal  revenue  act,  also  brought  about 
a  great  increase  in  the  rates  of  taxation.  Like  the  tariff  act 


THE  WAR  TARIFF.  II 

of  1862,  that  of  1 864  was  introduced,  explained,  amended, 
and  passed  under  the  management  of  Mr.  Morrill,  who 
was  Chairman  of  the  Committee  on  Ways  and  Means.  That 
gentleman  again  stated,  as  he  had  done  in  1862,  that  the 
passage  of  the  tariff  act  was  rendered  necessary  in  order 
to  put  domestic  producers  in  the  same,  situation,  so  far  as 
foreign  competition  was  concerned)  as  if  the  internal  taxes 
had  not  been  raised.  This  was  one  great  object  of  the 
new  tariff  ;  and  it  may  have  been  a  good  reason  for  bring- 
ing  forward  some  measure  of  the  kind.  But  it  explains 
only  in  part  the  measure  which  in  fact  was  proposed  and 
passed.  The  tariff  of  1864  was  a  characteristic  result  of 
that  veritable  furor  of  taxation  which  had  become  fixed 
in  the  minds  of  the  men  who  were  then  managing  the 
national  finances.  Mr.  Morrill,  and  those  who  with  him 
made  our  revenue  laws,  seem  to  have  had  but  one  princi- 
ple :  to  tax  every  possible  article  indiscriminately,  and  to 
tax  it  at  the  highest  rates  that  anyone  had  the  courage  to 
suggest.  They  carried  this  method  out  to  its  fullest 
extent  in  the  tariff  act  of  1864,  as  well  as  in  the  tax  act  of 
that  year.  At  the  same  time  these  statesmen  were  pro- 
tectionists, and  did  not  attempt  to  conceal  their  protec- 
tionist leanings.  What  between  their  willingness  to  make 
every  tax  and  duty  as  high  as  possible  for  the  sake  of 
raising  revenue,  and  their  belief  that  high  import  duties 
were  beneficial  to  the  country,  the  protectionists  had  an 
opportunity  such  as  the  country  has  never  before  given 
them.  It  would  be  unfair  to  say  that  Mr.  Morrill,  Mr, 


12  HISTORY  OF  THE  EXISTING  TARIFF. 

Stevens,  and  the  other  gentlemen  who  shaped  the  revenue 
laws,  consciously  used  the  urgent  need  of  money  for  the 
war  as  a  means  of  carrying  out  their  protectionist  theories, 
or  of  promoting,  through  high  duties,  private  ends  for 
themselves  or  other*.  But  it  is  certain  that  their  method 
of  treating  the  revenue  problems  resulted  in  a  most  unex- 
pected and  extravagant  application  of  protection,  and 
moreover,  made  possible  a  subservience  of  the  public  needs 
to  the  private  gains  of  individuals  such  as  unfortunately 
made  its  appearance  in  many  other  branches  of  the  war 
administration.  Every  domestic  producer  who  came  be- 
fore Congress  got  what  he  wanted  in  the  way  of  duties. 
Protection  ran  riot ;  and  this,  moreover,  not  merely  for 
the  time  being.  The  whole  tone  of  the  public  mind 
toward  the  question  of  import  duties  became  distorted. 
Not  only  during  the  war,  but  for  several  years  after  it,  all 
feeling  of  opposition  to  high  import  duties  almost  entirely 
disappeared.  The  habit  of  putting  on  as  high  rates  as 
any  one  asked  had  become  so  strong  that  it  could  hardly 
be  shaken  off ;  and  even  after  the  war,  almost  any  increase 
of  duties  demanded  by  domestic  producers  was  readily 
made.  The  war  had  in  many  ways  a  bracing  and  enno- 
bling influence  on  our  national  life ;  but  its  immediate 
effect  on  business  affairs,  and  on  all  legislation  affecting 
moneyed  interests,  was  demoralizing.  The  line  between 
public  duty  and  private  interests  was  often  lost  sight  of 
by  legislators.  Great  fortunes  were  made  by  changes  in 
legislation  urged  and  brought  about  by  those  who  were 


THE  WAR  TARIFF.  13 

benefited  by  them ;  and  the  country  has  seen  with  sorrow 
that  the  honor  and  honesty  of  public  men  did  not  remain 
undefiled.  The  tariff,  like  other  legislation  on  matters  of 
finance,  was  affected  by  these  causes.  Schemes  for  money- 
making  were  incorporated  in  it,  and  were  hardly  ques- 
tioned by  Congress.  When  more  enlightened  and 
unselfish  views  began  to  make  their  way,  and  protests 
were  made  against  the  abuses  and  excessive  duties  of  the 
war  period,  these  had  obtained,  as  we  shall  see,  too  strong 
a  hold  to  be  easily  shaken  off. 

Such  were  the  conditions  under  which  the  tariff  act  of 
1864  was  passed.  As  in  1862,  three  causes  were  at  work: 
in  the  first  place,  the  urgent  need  of  revenue  for  the  war : 
in  the  next,  the  wish  to  offset  the  internal  taxes_irnp.osed 
on  domestic  producers;  and  finally,  the  protectionist/^ 
leanings  of  those  who  managed  our  financial  legislation. 
These  causes  made  possible  a  tariff  act  which  in  ordinary 
times  would  have  been  summarily  rejected.  It  raised 
duties  greatly  and  indiscriminately, — so  much  so,  that  the 
average  rate  on  dutiable  commodities,  which  had  been 
37.2  per  cent,  under  the  act  of  1862,  became  47.06  per 
cent,  under  that  of  1864.  It  was  in  many  ways  crude 
and  ill-considered ;  it  established  protective  duties  more 
extreme  than  had  been  ventured  on  in  any  previous  tariff 
act  in  our  country's  history ;  it  contained  flagrant  abuses, 
in  the  shape  of  duties  whose  chief  effect  was  to  bring 
money  into  the  pockets  of  private  individuals. 

Nothing  more  clearly  illustrates  the  character  of  this 


14  HISTORY  OF  THE  EXISTING  TARIFF. 

piece  of  legislation,  and  the  circumstances  which  made  its 
enactment  a  possibility,  than  the  public  history  of  its 
passage  through  Congress.  The  bill  was  introduced  into 
the  House  on  June  2d  by  Mr.  Morrill.  General  debate 
on  it  was  stopped  after  one  day.  The  House  then  pro- 
ceeded to  the  consideration  of  amendments.  Almost 
without  exception  amendments  offered  by  Mr.  Morrill 
were  adopted,  and  all  others  were  rejected.  After  two 
days  had  been  given  in  this  way  to  the  amendments,  the 
House,  on  June  4th,  passed  the  bill.  In  the  Senate  much 
the  same  course  was  followed.  The  consideration  of  the 
bill  began  on  June  1 6th;  it  was  passed  on  the  following 
day.  That  is  to  say,  five  days  in  all  were  given  by  the 
two  houses  to  this  act,  which  was  in  its  effects  one  of  the 
most  important  financial  measures  ever  passed  in  the 
United  States.  The  bill  was  accepted  as  it  came  from 
the  Committee  on  Ways  and  Means,  and  was  passed  practi- 
cally without  debate  or  examination.  No  pretence  could 
be  made  of  any  detailed  or  effective  criticism  by  Congress. 
The  necessity  of  the  situation,  the  critical  state  of  the 
country,  the  urgent  need  of  revenue,  may  have  justified 
this  haste,  which,  it  is  safe  to  say,  is  unexampled  in  the 
The  tariff  history  of  civilized  countries.  But  surely  there 
of  1864  is  the  can  be  no  excuse  for  making  a  measure  passed 

basis  of 

the  existing  m  t^lls  manner  and  under  these  circumstances 

tariff.       the    foundation    of    the    permanent    economic 

policy   of   an    enlightened    people.      And   yet    this    has 

been   the   case,  and  it   is  the  central  point  in   the   his- 


THE  WAR  TARIFF.  15 

tory  of  tariff  legislation  of  the  last  twenty-five  years. 
The  tariff  act  of  1864  is  the  basis  of  the  existing  sys- 
tem of  import  duties.  Great  changes  have  indeed  been 
made  since  the  war,  as  will  be  seen  in  the  following 
chapters.  But  on  almost  all  the  articles  with  which  the 
protective  controversy  is  concerned,  rates  are  still  those 
of  the  tariff  act  of  1864.  This  is  said  without  taking  into 
account  the  last  tariff  act,  that  of  1883;  and  it  will  be 
seen  at  a  subsequent  point  that  the  changes  made  by  the 
act  of  1883  were  not  of  sufficient  importance  to  affect  the 
substantial  correctness  of  the  general  statement.  In  re- 
gard to  the  duties  as  they  stood  before  1883,  it  is  literally 
true,  in  regard  to  almost  all  protected  articles,  that  the 
tariff  act  of  1864  remained  in  force  for  twenty  years  with- 
out reductions.  Any  one  who  will  glance  over  the  margin 
of  those  sections  of  the  Revised  Statutes  of  the  United 
States  which  refer  to  the  tariff,  can  see  how  large  a  pro- 
portion of  the  rates  there  enumerated  date  from  the  year 
1864;  and  if  he  notes  the  occasional  protective  duties  set 
down  in  the  Revised  Statutes  as  having  been  fixed  by 
acts  passed  later  than  1864,  he  will  find  that  these  almost 
invariably  show,  not  a  reduction,  but  an  increase  over  the 
rates  of  the  war  tariff.  1 

1  In  Heyl's  "  Import  Duties  "  the  reader  will  find  the  act  of  1864 
printed  in  full,  those  parts  which  are  no  longer  in  force  being  distinguished 
by  small  type,  and  he  will  be  surprised  to  find  (in  any  edition  before  1883, 
how  few  sections  of  the  act  are  set  down  as  obsolete.  See,  e.g.,  edition  of 
1879,  pp.  57-73. 

It  should  be  said  that  the  act  of  1864  was  not  in  form  a  general  act, 
repealing  all  previous  enactments.  It  left  in  force,  for  instance,  all  pro- 


1 6  HISTORY  OF  THE  EXISTING  TARIFF. 

How  this  maintenance  of  the  war  duties  came  about, 
will  be  the  subject  of  the  following  chapters. 

visions  of  the  Morrill  act  of  1 86 1  and  of  the  tariff  act  of  1862  which  were 
not  expressly  changed  by  it.  But  it  affected  so  completely  and  with  so  few 
exceptions  the  whole  range  of  import  duties,  and  especially  the  protective 
duties,  that  it  was  practically  a  new  general  tariff. 


CHAPTER  II. 

THE  FAILURE  TO  REDUCE  THE  TARIFF  AFTER  THE  WAR. 

WHEN  the  war  closed,  the  revenue  acts  which  had  been 
hastily  passed  during  its  course  constituted  a  chaotic  mass. 
Congress  and  the  Secretary  of  the  Treasury  immediately 
set  to  work  to  bring  some  order  into  this  chaos,  by  fund- 
ing and  consolidating  the  debt,  by  contracting  the  paper 
currency,  and  by  reforming  and  reducing  the  internal 
taxes.1  The  years  between  1865  and  1870  are  full  of  dis- 
cussions and  enactments  on  taxation  and  finance.  On 
some  parts  of  the  financial  system,  in  regard  to  which 
there  was  little  disagreement,  action  was  prompt  and 
salutary.  The  complicated  mass  of  internal  taxes  was 
felt  to  be  an  evil  by  all.  It  bore  heavily  and  vexatiously 
on  the  people ;  and  Congress  proceeded  to  sweep  it 
away  with  all  possible  speed.  As  soon  as  the  immense 
floating  debt  had  been  funded,  and  the  extent  of  the 

1  Those  who  wish  to  get  some  knowledge  of  the  confused  character  of  the 
financial  legislation  called  out  by  the  war,  are  referred  to  Mr.  David  A. 
Wells's  excellent  essay  on  "  The  Recent  Financial  Experiences  of  the 
United  States  "  (1872).  Those  who  wish  to  study  more  in  detail  the  course 
of  events  after  the  war  should  read  Mr.  Wells's  reports  as  Commissioner  of 
the  Revenue,  of  1867,  1868,  1869,  and  1870. 

17 


1 8  HISTORY  OF  THE  EXISTING  TARIFF. 

annual  needs  of  the  government  became  somewhat  clear, 
Congress  set  to  work  at  repealing  and  modifying  the  excise 
laws.  It  is  not  necessary  to  enumerate  the  various  steps 

by  which  the  internal-tax  system    was   modi- 
Abolition  f 

of  the  fied.  Year  after  year  acts  for  reducing  and 
internal  taxes  ak0iishing  internal  taxes  were  passed.  By  1872 
all  those  which  had  any  connection  with  the 
subject  of  our  investigation — the  protective  duties — 
had  disappeared.1  The  taxes  on  spirits  and  beer, 
those  on  banks,  and  a  few  comparatively  unimportant 
taxes  on  matches,  patent  medicines,  and  other  articles 
were  retained.  But  all  those  taxes  which  bore  heavily  on 
the  productive  resources  of  the  country — those  taxes 
in  compensation  for  which  higher  duties  had  been  im- 
posed in  1862  and  1864 — were  entirely  abolished. 

Step  by  step  with  this  removal  of  the  internal  taxes,  a 
reduction  of  import  duties  should  have  taken  place  ;  at 
the  least,  a  reduction  which  would  have  taken  off  those 
additional  duties  that  had  been  put  on  in  order  to  offset 
the  internal  taxes.  This,  however,  Congress  hesitated  to 
undertake.  We  have  seen  in  the  preceding  chapter  that 
the  opportunity  given  by  the  war  system  of  taxation  was 
seized  by  the  protectionists  in  order  to  carry  out  their 
wishes.  It  would  not  be  easy  to  say  whether  at  the  time 
the  public  men  who  carried  out  this  legislation  meant  the 
new  system  of  import  duties  to  be  permanent.  Certainly 
the  war  methods  of  finance  as  a  whole  were  not  meant  to 

1  The  most  important  acts  for  reducing  the  internal  taxes  were  those  of  July 
n,  1866  ;  March  2,  1867  ;  March  31,  1868  ;  July  14,  1870  ;  June  6,  1872. 


REDUCTION   OF  THE  TARIFF.  19 

remain  in  force  for  an  unlimited  time.  Some  parts  of  the 
tariff  were  beyond  doubt  intended  to  be  merely  tem- 
porary ;  and  the  reasonable  expectation  was  that  the  pro- 
tective duties  would  sooner  or  later  be  overhauled  and 
reduced.  Had  the  question  been  directly  put  to  almost 
any  public  man,  whether  the  tariff  system  of  the  war  was 
to  be  continued,  the  answer  would  certainly  have  been  in 
the  negative, — that  in  due  time  the  import  duties  were  to 
be  lowered.1  During  the  years  of  confusion  immediately 
after  the  war  little  was  attempted ;  but  soon  a  disposition 
to  affect  some  reform  in  the  incongruous  mass  of  duties 
began  to  be  shown.  Each  year  schemes  for  reduction  and 
reform  were  brought  forward.  Commissions  were  ap- 
pointed, bills  were  elaborated  and  considered ;  but  the 
reform  was  put  off  from  year  to  year.  The  pressure  from 
the  interested  domestic  producers  was  strong  ;  the  power 
of  the  lobby  was  great ;  the  overshadowing  problem  of 
reconstruction  absorbed  the  energies  of  Congress.  Gradu- 

1  As  late  as  1870,  Mr.  Merrill  said  :  "  For  revenue  purposes,  and  not 
solely  for  protection,  fifty  per  cent,  in  many  instances  has  been  added  to  the 
tariff  [during  the  war]  to  enable  our  home  trade  to  bear  the  new  but  indis- 
pensable burdens  of  internal  taxation.  Already  we  have  relinquished  most 
of  such  taxes.  So  far,  then,  as  protection  is  concerned  *  *  *  we  might 
safely  remit  a  percentage  of  the  tariff  on  a  considerable  share  of  our  foreign 
importations.  *  *  *  It  is  a  mistake  of  the  friends  of  a  sound  tariff  to 
insist  on  the  extreme  rates  imposed  during  the  war,  if  less  will  raise  the 
necessary  revenue.  *  *  *  Whatever  percentage  of  duties  was  imposed 
on  foreign  goods  to  cover  internal  taxation  on  home  manufactures,  should 
not  now  be  claimed  as  the  lawful  prize  of  protection,  when  such  taxes  have 
been  repealed.  There  is  no  longer  an  equivalent." — Congress.  Globe,  1869- 
70,  p.  3295.  These  passages  occur  at  the  end  of  a  long  speech  in  favor  of 
the  principle  of  protection. 


2O  HISTORY  OF  THE  EXISTING  TARIFF. 

ally,  as  the  organization  of  industry  in  the  country 
adapted  itself  more  closely  to  the  tariff  as  it  was,  the  feel- 
ing that  no  reform  was  needed  obtained  a  strong  hold.  Many 
industries  had  grown  up,  or  had  been  greatly  extended, 
under  the  influence  of  the  war  legislation.  As  that  legis- 
lation continued  unchanged,  still  more  capital  was  em- 
barked in  establishments  whose  existence  or  prosperity  was 
in  some  degree  dependent  on  its  maintenance.  All  who 
were  connected  with  establishments  of  this  kind  asserted 
that  they  would  be  ruined  by  any  change.  The  business 
world  in  general  tends  to  be  favorable  to  the  maintenance 
of  things  as  they  are.  The  country  at  large,  and  especially 
those  parts  of  it  in  which  the  protected  industries  were 
concentrated,  began  to  look  on  the  existing  state  of 
things  as  permanent.  The  extreme  protective  system, 
which  had  been  at  the  first  a  temporary  expedient  for 
aiding  in  the  struggle  for  the  Union,  adopted  hastily  and 
without  any  thought  of  deliberation,  gradually  became 
accepted  as  a  permanent  institution.  From  this  it  was  a 
short  step,  in  order  to  explain  and  justify  the  existing 
state  of  things,  to  set  up  high  protection  as  a  theory  and 
a  dogma.  The  restraint  of  trade  with  foreign  countries, 
by  means  of  import  duties  of  forty,  fifty,  sixty,  even  a 
hundred  per  cent.,  came  to  be  advocated  as  a  good  thing 
in  itself  by  many  who,  under  normal  circumstances,  would 
have  thought  such  a  policy  preposterous.  Ideas  of  this 
kind  were  no  longer  the  exploded  errors  of  a  small  school 
of  economists ;  they  became  the  foundation  of  the  policy 


REDUCTION  OF  THE  TARIFF.  21 

of  a  great  people.  Then  the  mass  of  restrictive  legislation 
which  had  been  hurriedly  piled  up  during  the  war,  was 
strengthened  and  completed,  and  made  into  a  firm  and 
consistent  edifice.  On  purely  revenue  articles,  such  as 
are  not  produced  at  all  in  the  country,  the  duties  were  al- 
most entirely  abolished.  A  few  raw  materials,  it  is  true, 
were  admitted  at  low  rates,  or  entirely  free  of  duty.  But 
these  were  exceptions,  made  apparently  by  accident.  As 
a  rule,  the  duties  on  articles  produced  in  the  country,  that 
is,  the  protective  duties,  were  retained  at  the  war  figures, 
or  raised  above  them.  The  result  was  that  the  tariff 
gradually  became  exclusively  and  distinctly  a  protective 
measure  ;  it  included  almost  all  the  protective  duties  put 
on  during  the  war,  added  many  more  to  them,  and  no 
longer  contained  the  purely  revenue  duties  of  the  war. 

We  turn  now  to  a  somewhat  more  detailed  account  of 
the  process  by  which  the  reform  of  the  tariff  was  pre- 
vented. To  give  a  complete  account  of  the  various  tariff 
acts  which  were  passed,  or  of  the  tariff  bills  which  were 
pressed  without  success,  is  needless.  Every  session  of 
Congress  had  its  array  of  tariff  acts  and  tariff  bills  ;  and 
we  may  content  ourselves  with  an  account  of  those  which 
are  typical  of  the  general  course  of  events.  Of  the  at- 
tempts at  reform  which  were  made  in  the  years  imme- 
diately after  the  war,  the  fate  of  the  tariff  unsuccessful 
bills  of  1867  is  characteristic.  Two  proposals  tariff  bill  , 
were  then  before  Congress:  one  a  bill  passed 
by  the  House  at  the  previous  session  ;  the  other  a  bill 


22  HISTORY  OF  THE  EXISTING  TARIFF. 

prepared  by  Mr.  David  A.  Wells,  then  Special  Com- 
missioner of  the  Revenue,  and  heartily  approved  by 
Secretary  McCulloch.  The  great  rise  in  prices  and  in 
money  wages  in  these  years,  and  the  industrial  embar- 
rassment which  followed  the  war,  had  caused  a  demand 
for  still  higher  import  duties;  the  House  bill  had  been 
framed  to  answer  this  demand,  and  proposed  a  general 
increase.  Mr.  Wells  recommended  a  different  policy. 
He  had  not  then  become  convinced  of  the  truth  of  the 
principles  of  free  trade  ;  but  he  had  clearly  seen  that  the 
indiscriminate  protection  which  the  war  tariff  gave,  and 
which  the  House  bill  proposed  to  augment,  could  not  be 
beneficial.  His  bill  reduced  duties  on  raw  materials,  such 
as  scrap-iron,  coal,  lumber,  hemp,  and  flax  ;  and  it  either 
maintained  without  change  or  slightly  lowered  the  duties 
on  most  manufactured  articles.  A  careful  rearrangement 
was  at  the  same  time  made  in  the  rates  on  spices,  chemi- 
cals, dyes,  and  dye-woods, — articles  of  which  a  careful 
and  detailed  examination  is  necessary  for  the  determina- 
tion of  duties,  and  in  regard  to  which  the  tariff  contained 
then,  as  it  does  now,  much  that  was  arbitrary  and  inde- 
fensible. Mr.  Wells's  bill,  making  these  reforms,  gained 
the  day  over  the  less  liberal  House  bill.  It  was  passed  by 
the  Senate,  as  an  amendment  to  the  House  bill,  by  a  large 
majority  (27  to  10).  In  the  House  there  was  also  a  ma- 
jority in  its  favor ;  but  unfortunately  a  two-thirds  majori- 
ty was  necessary  in  order  to  suspend  the  rules  and  bring 
it  before  the  House.  The  vote  was  106  to  64  in  favor  of 


REDUCTION  OF  THE  TARTFF.  2$ 

the  bill ;  the  two-thirds  majority  was  not  obtained,  and 
it  failed  to  become  law.  The  result  was  not  only  that  no 
general  tariff  bill  was  passed  at  this  session,  but  the  course 
of  tariff  reform  for  the  future  received  a  regrettable  check. 
Had  Mr.  Wells's  proposals  been  enacted,  it  is  not  unlikely 
that  the  events  of  the  next  few  years  would  have  been 
very  different  from  what  in  fact  they  were.  It  would  be 
too  much  to  say  that  these  proposals  looked  forward  to 
still  further  steps  in  the  way  of  moderating  the  protective 
system,  or  that  their  favorable  reception  showed  any  dis- 
tinct tendency  against  protection.  There  was  at  that 
time  no  free-trade  feeling  at  all,  and  Mr.  Wells's  bill  was 
simply  a  reform  measure  from  the  protectionist  point  of 
view.  But  the  vote  on  it  is  nevertheless  significant  of  the 
fact  that  the  extreme  and  uncompromising  protective 
spirit  was  not  then  all-powerful.  The  bill,  it  is  true,  had 
been  modified  in  a  protectionist  direction  in  various  ways 
before  it  came  to  be  voted  on  ;  but  the  essential  reductions 
and  reforms  were  still  contained  in  it  and  the  votes  show 
that  the  protectionist  feeling  was  far  from  being  solidified 
at  that  time  to  the  extent  that  it  came  to  be  a  few  years 
later.  Had  the  bill  of  1867  been  passed,  the  character  of 
recent  tariff  legislation  might  have  been  very  different. 
A  beginning  would  have  been  made  in  looking  at  the 
tariff  from  a  sober  point  of  view,  and  in  reducing  duties 
that  were  clearly  pernicious.  The  growing  habit  of  look- 
ing on  the  war  rates  as  a  permanent  system  might  have 
been  checked,  and  the  attempts  at  tariff  reform  in  subse- 


24  HISTORY  OF  THE  EXISTING  TARIFF. 

quent  years  would  probably  have  found  stronger  support 
and  met  with  less  successful  opposition.  From  this  time 
till  the  tariff  act  of  1883  was  passed,  there  was  no  general 
tariff  bill  which  had  so  good  a  chance  of  being  passed. 
The  failure  of  the  attempt  of  1867  encouraged  the  protec- 
tionists in  fighting  for  the  retention  of  the  war  duties 
wherever  they  could  not  secure  an  increase  over  and 
above  them  ;  and  in  this  contest  they  were,  with  few 
exceptions,  successful.1 

Of  the  legislation  that  was  in  fact  carried  out,  the  act  of 
Act  of  1870.  1870  is  a  fair  example.  It  was  passed  in  compli- 
ance with  the  demand  for  a  reduction  of  taxes  and  for  tar- 
iff reform,  which  was  at  that  time  especially  strong  in  the 
West,  and  was  there  made  alike  by  Republicans  and  Dem- 
ocrats.2 The  declared  intention  of  those  who  framed  it  and 

1  Mr.  Wells's  bill  and  the  rates  proposed  in  the  House  bill  may  be  found 
in  his  report  for   1866-67,  pp.  235-290.     The  principle  of  "  enlightened 
protection  "  on  which  he  proceeded  is  stated  on  p.  34.     At  this  time  Mr. 
Wells  was  still  a  protectionist  ;  it  was  not  until  he  prepared  his  report  for 
1868-69  that  he  showed  himself  fully  convinced  of  the  unsoundness  of  the 
theory  of  protection.     His  able  investigations  and  the  matter-of-fact  tone  of 
all  of  his  reports  gave  much  weight  to  his  change  of  opinion,  and  caused  it 
to  strengthen  greatly  the  public  feeling  in  favor  of  tariff  reform. 

2  President  Garfield  (then  Representative)  said  in  1870  :    "  After  studying 
the  whole  subject  as  carefully  as  I  am  able,  I  am  firmly  of  the  opinion  that 
the  wisest  thing  that  the  protectionists  in  this  House  can  do  is  to  unite  on  a 
moderate  reduction  of  duties  on  imported  articles.     *     *     *     If  I  do  not 
misunderstand  the  signs  of  the  times,  unless  we  do  this  ourselves,  prudently 
and  wisely,  we  shall  before  long  be  compelled  to  submit  to  a  violent  reduc- 
tion, made  rudely  and   without  discrimination,   which  will  shock,    if   not 
shatter,   all  our   protected   industries." — Young's  Report,   p.   clxxii.     It  is 
worthy  of  remark  that  Mr.  Garfield  had  also  supported  earnestly  the  unsuc- 
cessful bill  of  1867.     He  had  appealed  to  his  party  to  vote  so  as  to  make  up 
the  two-thirds  majority  necessary  for  its  consideration,  telling  them  that  later 


REDUCTION  OF  THE  TARIFF.  2$ 

had  charge  of  it  in  Congress  was  to  reduce  taxation.  But 
the  reductions  made  by  it  were,  almost  without  exception, 
on  purelj^re^yeriue.aj±icies.  The  duties  on  tea,  coffee,  wines, 
sugar,  molasses,  and  spices  were  lowered.  Other  articles 
of  the  same  kind  were  put  on  the  free  list.  The  only 
noteworthy  reduction  in  the  protective  parts  of  the  tariff 
was  in  the  duty  on  pig-iron,  which  went  down  from  $9.00 
to  $7.00  a  ton.  On  the  other  hand,  a  very  considerable 
increase  of  duties  was  made  on  a  number  of  protected 
articles — on  steel  rails,  on  marble,  on  nickel,  and  on  other* 
articles.1  We  shall  have  occasion  to  refer  to  some  of  these 
indefensible  exactions  in  another  connection.'  At  present 
we  are  concerned  only  with  the  reductions  of  duty  which 
were  carried  out.  Among  the  protective  duties  the  lower- 
ing of  that  on  pig-iron  was  the  only  one  of  importance. 
This  change,  indeed,  might  well  have  been  made  at  an 
earlier  date,  for  the  internal  tax  of  $2.00  on  pig-iron  (in 
compensation  for  which  the  tariff  rate  had  been  raised  to 
$9.00  in  1864)  had  been  taken  off  as  early  as  i866.3 

The  only 'effort  to  reform  the  protective  parts  of  the 
tariff   which    had   any  degree    of   success,  was   made    in 

they  might    "make  up  their  record"  by  voting  against  it. — Congr.  Globe, 
1866-67,  pp.  1657,  1658. 

1  An  increase  in  the  duties  on  bar-iron  was  also  proposed  in  the  bill  as 
reported  by  the  Committee  on  Ways  and  Means  ;  but  this,  fortunately,  was 
more  than  could  be  carried  through.     See  the  speeches  of  Messrs.  Brooks 
(Congr.  Globe,  1869-70,   part  7,   appendix,  pp.  163-167)  and  Allison  (ibid., 
p.  192  et  seq.),  which  protest  against  the  sham  reductions  of  the  bill. 

2  See  chapter  iii. 

3  See  the  list  of  reductions  made  by  the  act  of  1870  in  Young's  Report,  p. 
clxxvii. 


26  HISTORY  OF  THE  EXISTING  TARIFF. 

1872.  The  tactics  of  the  proctectionists  in  that  year 
illustrate  strikingly  the  manner  in  which  attempts  at 
tariff  reform  have  been  frustrated  ;  and  the  history  of 
the  attempt  is,  from  this  point  of  view,  so  instructive 
that  it  may  be  told  somewhat  in  detail.  The  situation 
Situation  in  in  1 872  was  in  many  ways  favorable  for  tariff 
1872.  reform.  The  idea  of  tax  and  tariff  reform 
was  familiar  to  the  people  at  large.  It  was  not  as  yet 
openly  pretended  that  the  protective  duties  were  to 
•remain  indefinitely  as  they  had  been  fixed  in  the  war. 
The  act  of  1870  had  made  a  concession  by  the  reduc- 
tion on  pig-iron ;  further  changes  of  the  same  kind  were 
expected  to  follow.  Moreover,  the  feeling  in  favor  of 
tariff  reform  was  in  all  these  years  particularly  strong 
in  the  West.  So  strong  was  it  that,  as  has  already  been 
noted,  it  overrode  party  differences,  and  made  almost  all 
the  Western  Congressmen,  whether  Democrats  or  Repub- 
licans, act  in  favor  of  reductions  in  the  tariff.  The  cause 
of  this  state  of  things  is  to  be  found  in  the  economic  con- 
dition of  the  country  from  the  end  of  the  war  till  after  the 
panic  of  1873.  t  The  prices  of  manufactured  goods  were 
then  high,  and  imports  were  large.  On  the  other  hand, 
exports  were  comparatively  small  and  the  prices  of  grain 
and  provisions  low.  The  agricultural  population  was 
far  from  prosperous.  The  granger  movement,  and  the 
agitation  against  the  railroads,  were  one  result  of  the 
depressed  condition  of  the  farmers.  Another  result  was 
the  strong  feeling  against  the  tariff,  which  the  farmers 


REDUCTION  OF  THE  TARIFF.  2? 

rightly  believed  to  be  among  the  causes  of  the  state  of 
things  under  which  they  were  suffering.1  Their  represen- 
tatives in  Congress  were  therefore  compelled  to  take  a 
stand  in  favor  of  lowering  the  protective  duties.  The 
Western  members  being  nearly  all  agreed  on  this  subject, 
Congress  contained  a  clear  majority  in  favor  of  a  reform 
in  the  tariff.  Party  lines  at  that  time  had  little  influence 
on  the  protective  controversy,  and,  although  both  houses 
were  strongly  Republican,  a  strong  disposition  showed 
itself  in  both  in  favor  of  measures  for  lowering  the  pro- 
tective duties. 

Added  to  all  this,  the  state  of  the  finances  demanded 
immediate  attention.  The  redundant  revenue,  which  has 
forced  Congress  in  the  last  two  or  three  years  to  pay 
attention  to  the  question  of  tariff  reform,  had  the  same 
influence  in  1872.  In  each  of  the  fiscal  years,  1870-71  and 
1871-72,  the  surplus  revenue,  after  paying  all  appropria- 
tions and  all  interest  on  the  public  debt,  amounted  to 
about  $100,000,000,  a  sum  greatly  in  excess  of  any  re- 
quirements of  the  sinking  fund.  The  government  was 
buying  bonds  in  the  open  market  in  order  to  dispose  of 
the  money  that  was  flowing  into  the  treasury  vaults.3 

1  No  satisfactory  investigation  of  the  period  preceding  the  crisis  of  1873 
has  yet  been  made.  Of  the  fact  that  the  situation  was  especially  depressing 
for  the  agricultural  parts  of  the  country,  there  can  be  no  doubt.  The 
speculative  mania  and  the  fictitious  prosperity  of  those  years  were  felt  most 
strikingly  in  manufactures  and  railroad  building  ;  exactly  why  so  little  effect 
of  this  appeared  in  agriculture  has  never  been  clearly  explained.  The  whole 
period  will  repay  careful  economic  study. 

8  On  account  of  the  low  premium  on  bonds  and  the  high  premium  on  gold, 


28  HISTORY  OF  THE  EXISTING  TARIFF. 

This  being  the  state  of  affairs,  the  Committee  on 
Ways  and  Means  introduced  into  the  House  a  bill 
which  took  decided  steps  in  the  direction  of  tariff 
Reform  bill  ref°rm-  Mr.  Dawes,  of  Massachusetts,  the 
in  chairman  of  the  committee,  was  opposed  to 
the  recommendations  of  the  majority  of  its 
members,  and  therefore  left  the  explanation  and  man- 
agement of  the  bill  to  Mr.  Finkelnburg,  of  Missouri. 
That  gentleman  explained  that  the  committee's  measure 
was  intended  merely  to  u  divest  some  industries  of  the 
superabundant  protection  which  smells  of  monoply, 
and  which  it  was  never  intended  they  should  enjoy  after 
the  war."  1  The  bill  lopped  off  something  from  the  protec- 
tive duties  in  almost  all  directions.  Pig-iron  was  to  be 
charged  $6.00  instead  of  $7.00  a  ton.  The  duties  on  wool 
and  woollens,  and  those  on  cottons,  were  to  be  reduced  by 
about  twenty  per  cent.  Coal,  salt,  and  lumber  were  subjected 
to  lower  duties.  Tea  and  coffee  were  also  to  pay  less  ;  but 
the  duties  on  them  were  not  entirely  abolished, — a  circum- 
stance which  it  is  important  to  note  in  connection  with 
subsequent  events.  The  bill  still  left  an  ample  measure  of 
protection  subsisting ;  but  it  was  clearly  intended  to 
bring  about  an  appreciable  and  permanent  reduction  of 
the  war  duties. 

This  bill  was  introduced  into  the  House  in  April.  Be- 
fore that  time  another  bill  had  been  introduced  in  the 

it  was  cheaper  for  the  government  at  that  time  to  buy  bonds  in  the  open  market 
than  to  redeem  them  at  par. 

1  See  Mr.  Finkelnburg's  speech,  Congr.  Globe,  1871-72,  pp.  2826-2829. 


REDUCTION  OF  THE  TARIFF.  29 

Senate,  by  the  committee  of  that  body  on  finance,  which 
also    lowered  duties,   but  by  no   means  in   so 

Ten  per 

incisive   a   manner    as  the    House    bill.      The  cent,  reduc- 
Senate    bill    simply    proposed   to    reduce    all       tlon 

proposed. 

the  protective  duties  by  ten  per  cent.  When 
the  ten  per  cent,  reduction  was  first  suggested,  it  was 
strongly  opposed  by  the  protected  interests,  whose  rep- 
resentatives, it  is  hardly  necessary  to  say,  were  present 
in  full  force.  They  were  unwilling  to  yield  even  so  small 
a  diminution.  When,  however,  the  House  bill,  making 
much  more  radical  changes,  was  brought  forward  with  the 
sanction  of  a  majority  of  the  Committee  on  Ways  and 
Means,  they  saw  that  an  obstinate  resistance  to  any 
change  might  lead  to  dangerous  results.  A  change  of 
policy  was  accordingly  determined  on.  Mr.  John  L. 
Hayes,  who  has  been  for  many  years  Secre-  Polic  of 
tary  of  the  Wool-Manufacturers'  Association,  the  protec- 
and  was  President  of  the  Tariff  Commission  tlomsts' 
of  1882,  was  at  that  time  in  Washington  as  agent 
for  the  wool  manufacturers.  Mr.  Hayes  has  given  an 
account  of  the  events  at  Washington  in  1872,  from  which 
it  appears  that  he  was  chiefly  instrumental  in  bringing 
about  the  adoption  of  a  more  far-sighted  policy  by  the 
protectionists.1  Mr.  Hayes  believed  it  to  be  more  easy  to 
defeat  the  serious  movement  in  favor  of  tariff  reform 
by  making  some  slight  concessions  than  by  unconditional 

1  See  the  speech  which  Mr.  Hayes  made,  shortly  after  the  close  of  the  ses- 
sion of  1872,  at  a  meeting  of  the  wool  manufacturers  in  Boston  ;  printed  in 
the  Bulletin  of  the  Wool  Manufacturers,  vol.  iii.,  pp.  283-290. 


30  HISTORY  OF  THE  EXISTING  TARIFF. 

opposition.  The  woollen  manufacturers  were  first  induced 
to  agree  to  this  policy  ;  the  Pennsylvania  iron  makers  were 
next  brought  over  to  it ;  and  finally,  the  whole  weight  of 
the  protected  interests  was  made  to  bear  in  the  same 
direction.  As  a  concession  to  the  demand  for  reform,  the 
general  ten  per  cent,  reduction  was  to  be  permitted.  With 
this,  however,  was  to  be  joined  a  sweeping  reduction 
of  the  non-protective  sources  of  revenue:  the  taxes  on 
whiskey  and  tobacco  were  to  be  lowered,  and  the  tea  and 
coffee  duties  were  to  be  entirely  abolished. 

This  plan  of  action  was  successfully  carried  out.  An 
act  for  abolishing  the  duties  on  tea  and  coffee  was  first 
passed.1  This  being  disposed  of,  the  general  tax  and  tariff 
bill  was  taken  up  in  the  House.  The  Senate  had  already 
indicated  its  willingness  to  act  in  the  manner  desired  by 
the  protectionists.  It  had  passed  and  sent  to  the  House 
a  bill  making  the  general  reduction  of  ten  per  cent.,  and 
nothing  remained  but  to  get  the  consent  of  the  House. 
But  this  consent  was  not  easily  obtained.  A  large  num- 
ber of  representatives  were  in  favor  of  a  more  thorough 
and  radical  reform,  and  wished  for  the  passage  of  the  bill 
prepared  by  the  Ways  and  Means  Committee.  But  un- 
fortunately the  reform  forces  were  divided,  and  only  a 
part  of  them  insisted  on  the  Ways  and  Means  bill.  The 
remainder  were  willing  to  accept  the  ten  per  cent,  reduc- 
tion, which  the  protectionists  yielded.  On  the  other  hand, 

1  The  House  had  already  passed,  at  the  extra  session  in  the  spring  of 
1871,  a  bill  for  admitting  tea  and  coffee  free  of  duty.  This  bill  was  now 
taken  up  and  passed  by  the  Senate. 


REDUCTION  OF  THE  TARIFF.  31 

the  protectionist  members  were  united.  Messrs.  Kelley 
and  Dawes  led  them,  and  succeeded  in  bringing  their 
whole  force  to  vote  in  favor  of  the  horizontal  reduction. 
The  powerful  influence  of  the  Speaker,  Mr.  Elaine,  was  also 
on  their  side.  They  finally  succeeded  in  having  the  original 
committee  bill  set  aside,  and  in  passing  the  bill  for  the 
ten  per  cent,  reduction.  Most  of  the  revenue  reformers  in 
the  end  voted  for  it,  believing  it  to  be  the  utmost  that 

could  be  obtained.     It  must  be  observed,  how- 
Act  of  1872. 

ever,  to  their  credit,  that  the  "  horizontal  "  re- 
duction of  the  protective  duties  was  not  the  only  concession 
to  the  reform  feeling  that  was  made  by  the  act  of  1872.  It 
also  contained  a  number  of  minor  but  significant  changes 
of  duty.  The  duty  on  salt  was  reduced  to  one  half  the 
previous  rates ;  for  the  feeling  against  the  war-duty  on 
salt,  which  very  clearly  resulted  in  putting  so  much  money 
into  the  pockets  of  the  Syracuse  and  Saginaw  producers, 
was  too  strong  to  be  resisted.  The  duty  on  coal  was  re- 
duced from  $1.25  to  75  cents  a  ton.  Some  raw  materials, 
of  which  hides  and  paper  stock  were  alone  of  considerable 
importance,  were  admitted  free  of  duty.  The  free  list 
was  also  enlarged  by  putting  on  it  a  number  of  minor 
articles  used  by  manufacturers.  But  the  important 
change  in  the  protective  duties  was  the  ten  per  cent,  re- 
duction, which  applied  to  all  manufactures  of  cotton, 
wool,  iron,  steel,  metals  in  general,  paper,  glass,  and 
leather, — that  is,  to  all  the  great  protective  industries. 
It  is  worth  while  to  dwell  for  a  moment  on  the  abolition 


32  HISTORY   OF  THE  EXISTING  TARIFF, 

of  the  duties  on  tea  and  coffee.     At  the  time  much  was 
said   about   this  as  an    act   for  the  benefit   of 

Removal 

of  the  tea    "ie   working   man,   to   whom-  it   was    to    give 
and  coffee    a    "  free   breakfast-table."       In    fact,    as    it    is 

duties. 

hardly    necessary  to    say,   it    was    a    distinctly 

protectionist  measure.  The  loss  of  revenue  which  it 
caused  would  ordinarily  have  to  be  made  good  by  impos- 
ing or  retaining  protective  duties.  As  matters  stood  in 
1872,  it  prevented  at  least  a  more  complete  reduction  of 
the  latter.  The  tea  and  coffee  duties  were  among  the 
simplest,  most  equable,  and  most  productive  sources  of 
national  revenue.  As  taxes,  they  were  little  felt  by  con- 
sumers. Most  important  to  note,  they  yielded  to  the 
government  every  thing  which  they  took  out  of  the 
pockets  of  the  tax-payers.  This  is  their  distinctive  ad- 
vantage over  protective  duties.  A  duty  on  imports,  like 
every  indirect  tax,  reaches  the  tax-payer  in  the  shape  of 
higher  prices  of  the  commodities  which  he  consumes. 
When  a  duty  is  imposed  on  an  article  like  tea  or  coffee, 
the  whole  increase  of  price  to  the  consumer  results  in  so- 
much  revenue  to  the  government.  But  when  a  duty  is 
imposed  on  an  article  like  silks  or  linens,  and  results  in 
the  production  (or  in  an  increased  production)  of  this 
article  at  home,  the  effect  is  different.  Here  also  the 
commodity  is  increased  in  price  to  the  consumer,  and  he 
is  thereby  taxed.  So  far  as  he  uses  imported  articles,  the 
increased  price,  as  in  the  case  of  tea  and  coffee,  is  a  tax  paid 
to  the  government ;  and  as  such  it  is  not  specially  open  to 


REDUCTION  OF  THE  TARIFF.  33 

objection.  But  when  the  consumer  buys  and  uses  an 
article  of  this  kind  which  is  made  at  home,  he  must  pay 
an  increased  price  quite  as  much  as  when  he  buys  the  im- 
ported article.  The  increase  of  price,  or  tax,  in  such  a 
case  is  not  paid  to  the  government,  but  to  the  home  pro- 
ducer. It  does  not  flow  into  the  national  revenue,  and 
does  not  serve  to  pay  .for  the  performance  of  government 
functions.  It  flows  into  the  pockets  of  a  private  indi- 
vidual. The  private  individual  does  not  necessarily 
obtain,  on  account  of  this  tax,  exceptional  profits  in  the 
production  of  the  dutied,  i.  e.,  protected,  articles.  It  is  true 
that  in  some  cases  of  monopoly,  as  we  shall  have  occasion 
to  see,  he  may  permanently  make  high  profits.  But  in 
many  cases  he  fails  to  do  so.  It  may  cost  more,  from 
inherent  and  natural  causes,  to  make  the  protected  article 
at  home  than  it  costs  to  make  it  abroad.  In  this  case — the 
most  frequent — the  home  producer  gets  a  higher  price  in 
consequence  of  the  duty ;  but  he  does  not  make  corre- 
spondingly high  profits.  The  tax  on  the  consumer  here 
represents  simply  the  greater  cost,  the  inherent  natural 
disadvantage,  of  making  the  commodity  at  home.  It 
represents  a  useless  diversion  of  national  industry.  A 
commodity  is  made  at  home  which  can  be  more  cheaply 
bought  abroad ;  and  nobody  is  benefited  by  the  tax  im- 
posed on  the  consumer.  All  this  is  clear  and  familiar  to 
every  one  who  has  grasped  the  fundamental  principles  of 
political  economy ;  but  so  great  a  mass  of  untrue  and 
sophistical  writing  is  constantly  put  forth  on  the  protec- 


34  HISTORY  OF  THE  EXISTING  TARIFF. 

tive  controversy,  that   the  sound  elementary  principles 
cannot  be  too  often  repeated. 

For  these  reasons  import  duties,  where  they  must  be 
levied,  should  be  imposed  primarily  on  articles  like  tea 
and  coffee,  of  which  the  domestic  production  will  not  be 
stimulated  by  the  duties.  In  a  government  like  ours, 
where  the  national  revenue,  by  tradition  and  from  the 
necessity  of  the  case,  is  chiefly  derived  from  import  duties, 
these  should  be  imposed  primarily  on  non-protected  com- 
modities. At  the  most,  it  is  only  after  such  articles  have 
yielded  the  revenue  that  they  can  reasonably  and  properly 
afford,  that  resort  should  be  had  to  duties  which  operate 
for  protection.  But  these  principles  have  been  often  lost 
sight  of  in  our  tariff  legislation.1  In  the  legislation  of  the 
last  twenty  years  they  have  been  entirely  disregarded. 
The  removal  of  the  tea  and  coffee  duties  is  only  one  of  a 
number  of  changes  of  the  same  kind.  Step  by  step,  in 
the  various  tariff  acts  which  have  been  passed  since  the 
war,  all  the  non-protective  duties  have  been  swept  away, 
in  order  that  the  protective  duties  might  be  retained^ 
Articles  like  cocoa,  pepper,  cinnamon,  cloves,  olives,  the 
most  natural  and  proper  sources  of  revenue  from  import 
duties,  have  been  admitted  free  of  duty.  The  decisive 
step  in  this  process  was  the  tea  and  coffee  act  of  1872. 
There  are  at  present  none  other  than  protective  duties  in 
our  tariff.  In  recent  years,  when  it  has  again  brought  in 

1  Even  the  tariffs  of  1846  and  1857,  which  were  supposed  to  be  based  on 
principles  opposed  to  protection,  admitted  tea  and  coffee  free  of  duty,  while 
they  imposed  heavy  duties  on  iron,  cottons,  woollens,  etc. 


REDUCTION  OF  THE  TARIFF.  35 

an  excessive  revenue,  those  who  oppose  any  diminution 
of  protection  advocate,  as  a  step  analogous  to  the  aboli- 
tion of  the  tea  and  coffee  duties,  the  removal  of  the  in- 
ternal taxes  on  tobacco,  and  even  of  those  on  spirits. 
The  object  here  is  the  same  as  it  was  in  1872, — to  reduce 
the  revenue  without  touching  the  protective  parts  of  the 
tariff. 

To  return  from  this  digression  to  the  tariff  act  of  1872. 
The  free-traders  were  on  the  whole  satisfied  with  it ;  they 
thought  it  a  step  in  the  right  direction,  and  the  beginning 
of  a  process  of  reform.  The  protectionists,  however, 
believed  that  they  had  won  a  victory  ;  and,  as  events 
proved,  they  were  -right.1 

It  is  not  within  the  purpose  of  this  volume  to  discuss 
the  intrinsic  merits  of  a  "  horizontal  reduction,"  such  as 
was  carried  out  in  the  act  of  1872.  Undoubtedly  it  is 
a  simple  and  indiscriminating  method  of  approaching  the 
problem  of  tariff  reform.  The  objections  to  it  were 
very  prominently  brought  forward  when  Mr.  Morrison, 
during  the  session  of  1883-84,  proposed  to  take  off  ten  per 
cent,  from  the  duties,  in  exactly  the  same  way  that  the 
tariff  of  1872  had  taken  off  ten  per  cent.  It  is  certainly 
curious  that  this  method,  when  proposed  by  Mr.  Morrison 
in  1884,  should  be  vehemently  denounced  by  protectionists 

1  Mr.  Hayes,  in  the  speech  already  referred  to,  spoke  of  "the  grand  re- 
sult of  a  tariff  bill  reducing  duties  fifty-three  millions  of  dollars,  and  yet  leav- 
ing the  great  industries  almost  intact.  The  present  tariff  (of  1872)  was 
made  by  our  friends,  in  the  interest  of  protection."  And  again  :  "A 
reduction  of  over  fifty  millions  of  dollars,  and  yet  taking  only  a  shaving 
off  from  the  protection  duties." 


36  HISTORY  OF  THE  EXISTING  TARIFF. 

as  crude,  vicious,  unscientific,  and  impractical,  although, 
when  proposed  by  Mr.  Dawes  in  1872,  it  received  their 
earnest  support.  There  is,  however,  one  objection  to 
such  a  plan  which  was  hardly  mentioned  in  connection 
with  Mr.  Morrison's  bill,  but  was  brought  out  very  clearly 
by  the  experience  of  1872.  This  is,  that  a  horizontal  re- 
duction can  very  easily  be  revoked.  The  reduction  made 
in  1872  was  repealed  with  little  difficulty  in  1875.  After 
the  panic  of  1873,  imports  greatly  diminished,  and 
Ten  per  with  them  the  customs  revenue.  No  further 
cent,  reduc-  thought  of  tax  reduction  was  entertained  ; 

tion  re-  . 

pealed  in     anc*  soon  a  need  of  increasing  the  revenue  was 
l875-       felt.     In  1875  Congress,  as  one  means  to  that 
end,  repealed  the  ten   per  cent,  reduction,  and  put  du- 
ties  back   to  where  they  had  been  before   I872.1     The 
repeal  attracted    comparatively  little  attention,  and  was 

1  It  was  far  from  necessary,  for  revenue  purposes,  to  repeal  the  ten  per 
cent,  clause.  Mr.  Dawes  (who  advocated  in  1875  the  repeal  of  his  own 
measure  of  1872)  attempted  to  show  the  need  of  raising  the  tariff  by  assum- 
ing that  a  fixed  sum  of  $47,000,000  per  year  was  necessary  for  the  sinking- 
fund, — that  the  faith  of  the  government  was  pledged  to  devoting  this  sum  to 
the  redemption  of  the  debt.  But  it  was  very  clearly  shown  that  the 
government  never  had  carried  out  the  sinking-fund  provision  in  any  exact 
way.  In  some  years  it  bought  for  the  sinking  fund  much  less  than  the  one 
per  cent  of  the  debt  which  was  supposed  to  be  annually  redeemed  ;  in  other 
years  (notably  in  1869-73)  it  bought  much  more  than  this  one  per  cent. 
The  same  policy  has  been  followed  in  recent  years.  There  can  be  little 
doubt  that  the  need  of  providing  for  the  sinking  fund  was  used  merely  as  an 
excuse  for  raising  the  duties.  See  Mr.  Wood's  remarks,  Congr.  Record, 
1874-75,  PP-  1187,  1188,  and  cf.  Mr.  Beck's  speech,  ibid.,  pp.  1401,  1402. 

It  may  be  noted  that  in  1875  President  Grant  and  the  Secretary  of  the 
Treasury  recommended,  and  men  like  Senators  Sherman  and  Schurz  sup- 
ported, a  re-imposition  of  duties  on  tea  and  .coffee  as  the  best  means  of  in- 
creasing the  customs  revenues. 


REDUCTION  OF  THE  TARIFF.  37 

carried  without  great  opposition.  If  a  detailed  examina- 
tion of  the  tariff  had  been  made  in  1872,  and  if  duties 
had  been  reduced  in  that  year  carefully  and  with  discrimi- 
nation, it  would  have  been  much  more  difficult  in  1875  to 
put  them  back  to  the  old  figures.  If  some  of  the  duties 
which  are  of  a  particularly  exorbitant  or  burdensome 
character  had  been  individually  reduced  in  1872,  public 
opinion  would  not  easily  have  permitted  the  restitution  of 
the  old  rates.  But  the  general  ten  per  cent,  reduction, 
which  touched  none  of  the  duties  in  detail,  was  repealed 
without  attracting  public  attention.  The  old  rates  were 
restored  ;  and  the  best  opportunity  which  the  country 
has  had  for  a  considerable  modification  of  the  protective 
system,  slipped  by  without  any  permanent  result. 

Of  the  attempts  at  reform  which  were  made  between 
1875  and  1883,  little  need  be  said.  Mr.  Morrison  in  1876. 
and  Mr.  Wood  in  1878,  introduced  tariff  bills  into  the 
House.  These  bills  were  the  occasion  of  more  or  less 
debate  ;  but  there  was  at  no  time  any  probability  of 
their  being  enacted.1  In  1879  the  duty  on  quinine  was 
abolished  entirely, — a  measure  most  beneficial  and  praise- 
worthy in  itself,  but  not  of  any  considerable  importance 
in  the  economic  history  of  the  country. 

Of  the  tariff  act  of  1883  we  do  not  purpose  speaking  in 

1  Those  who  are  interested  in  the  details  of  these  measures  will  find  the 
bill  of  1876  explained  in  Mr.  Morrison's  speech,  in  Cong.  Record,  1875-1876, 
p.  3321.  The  bill  of  1878  was  similarly  explained  by  Mr.  W9od,  Cong. 
Record,  1877-78,  p.  2398.  It  was  at  one  time  supposed  that  Mr.  Wood's 
bill  might  be  passed  by  the  House  ;  but  the  enacting  clause  was  struck  out, 
after  some  debate,  by  a  vote  of  137  to  114. 


38  HISTORY  OF  THE  EXISTING  TARIFF. 

this  connection.     It  will  be  discussed  in  detail  in  the  con- 
cluding pages. 

We  have  now  completed  our  account  of  the  attempts 
to  reform  the  tariff  which  were  made  between  the  close  of 
the  Civil  War  and  the  act  of  last  year  (1883).  It  is  clear 
that  the  duties,  as  they  were  imposed  in  the  act  of  1864, 
were  retained  substantially  without  change  during  the 
whole  of  this  period.  The  non-protective  duties  were 
indeed  swept  away.  A  few  reductions  of  protective 
duties  were  made  in  the  acts  of  1870  and  1872;  but  the 
great  mass  of  duties  imposed  on  articles  which  are  pro- 
duced in  this  country  were  not  touched.  It  is  worth 
while  to  note  some  of  the  more  important  classes  of  goods 
on  which  the  duties  levied  in  1864  remained  in  force,  and 
to  compare  these  duties  with  the  rates  of  the  Morrill 
tariff  of  1861.  The  increase  which  was  the  result  of  the 
war  will  appear  most  plainly  from  such  a  comparison.  In 
the  appended  table1  it  will  be  seen  that  the  rates  on  books, 
chinaware,  and  pottery,  cotton  goods,  linen,  hemp,  and 
jute  goods,  glass,  gloves,  bar-  and  hoop-iron,  iron  rails, 
steel,  lead,  paper,  and  silks,  were  increased  by  from  ten  to 
thirty  per  cent,  during  the  war,  and  that  the  increase  then 
made  was  maintained  without  the  slightest  change  till 
1883.  That  these  great  changes,  at  the  time  when  they 
were  made,  were  not  intended  or  expected  to  be  per- 
manent, cannot  be  denied.  An  example  like  that  of  the 
duty  on  cotton  goods  shows  plainly  how  the  duties  were 

1  See  table  III.,  Appendix. 


REDUCTION  OF  THE  TARIFF.  39 

fixed  during  the  war  according  to  the  conditions  of  the 
time,  and  without  expectation  of  their  remaining  indefi- 
nitely in  force.  The  duty  on  the  cheapest  grade  of  cotton 
tissues  had  been  in  1861  fixed  at  one  cent  per  yard. 
During  the  war  the  price  of  cotton  rose  greatly,  and  with 
it  the  prices  of  cotton  goods.  Consequently  it  is  not  sur- 
prising to  find  the  duty  in  1864  to  be  five  cents  per  yard 
on  this  grade  of  cottons.  But  shortly  after  the  war,  raw 
cotton  fell  nearly  to  its  former  price  ;  and  it  does  occasion 
surprise  to  find  that  the  duty  of  five  cents  per  yard  should 
have  been  retained  without  change  till  1883,  and  even  in 
the  act  of  1883  retained  at  a  figure  much  above  that  of 
1861.  The  duty  on  cheap  cottons  happens  not  to  have 
been  particularly  burdensome,  since  goods  of  this  kind  are 
made  in  this  country  as  cheaply  as  they  can  be  made 
abroad.  But  the  retention  of  the  war  duty  on  them,  even 
after  it  became  exorbitantly  high,  is  typical  of  the  way  in 
which  duties  were  retained  on  other  articles  on  which 
they  were  burdensome.  Duties  which  had  been  imposed 
during  the  war,  and  which  had  then  been  made  very  high, 
either  for  reasons  of  revenue  or  because  of  circumstances 
such  as  led  to  the  heavy  rate  on  cottons,  were  retained 
unchanged  after  the  war  ceased.  It  would  be  untrue  to 
say  that  protection  did  not  exist  before  the  great  struggle 
began, — the  tariff  of  1861,  was  a  distinctly  protectionist 
measure ;  but  it  is  clear  that  the  extreme  protectionist 
character  of  our  tariff  is  an  indirect  and  unexpected  result 
of  the  Civil  War. 


CHAPTER  III. 

HOW  DUTIES  WERE   RAISED   ABOVE   THE  WAR  RATES. 

IN  the  preceding  chapter  it  has  been  shown  how  the 
duties  levied  during  the  war  failed  to  be  reduced  after  its 
close.  But  in  many  cases  not  only  has  there  been  a  failure 
to  diminish  the  war  rates,  but  an  actual  increase  over 
them.  We  have  already  noted  how  the  maintenance  of 
the  tariff  of  1864  brought  about  gradually  a  feeling  that 
such  a  system  was  a  good  thing  in  itself,  and  desirable  as 
a  permanent  policy.  This  feeling,  and  the  fact  that  Con- 
gress and  the  public  had  grown  accustomed  to  heavy 
taxes  and  high  rates,  enabled  many  measures  to  become 
law  which  under  normal  circumstances  would  never  have 
been  submitted  to.  In  the  present  chapter  we  are  con- 
cerned with  the  not  infrequent  instances  in  which,  in  obedi- 
ence to  the  demands  of  the  protected  interests,  duties 
were  raised  over  and  above  the  point,  already  high,  at 
which  they  were  left  when  the  war  closed.  The  most 
striking  instance  of  legislation  of  this  kind  is  to  be  found 
in  the  wool  and  woollens  act  of  1867;  a  measure  which 
is  so  characteristic  of  the  complications  of  our  tariff,  of 
the  remarkable  height  to  which  protection  has  been  car- 

40 


HOW  DUTIES  WERE  RAISED.  4! 

ried  in  it,  and  of  the  submission  of  Congress  and  the 
people  to  the  demands  of  domestic  manu-  Wool  and 
facturers  that  it  deserves  to  be  described  woollen  act 
in  detail.  Such  a  description  is  the  more 
desirable  since  the  woollen  schedule  of  our  tariff  is  the 
one  which  imposes  the  heaviest  and  the  least  defensi- 
ble burdens  on  consumers,  and  at  the  same  time  is  the 
most  difficult  of  comprehension  for  those  who  have  noth- 
ing but  the  mere  language  of  the  statute  to  guide  them. 
In  order  to  understand  the  complicated  system  that  now 
exists,  we  must  go  back  to  the  Morrill  tariff  act  of  1861. 
In  that  act  specific  duties  on  wool  were  substituted  for  the 
ad-valorem  rates  of  1846  and  1857.  The  cheaper  kinds  of 
wool,  costing  eighteen  cents  or  less  per  pound,  were  still 
admitted  at  the  nominal  rate  of  five  per  cent.  But  wool 
costing  between  eighteen  and  twenty-four  cents  per  pound 
was  charged  three  cents  per  pound  ;  that  costing  more 
than  twenty-four  cents  was  charged  nine  cents  per  pound. 
The  duties  on  woollens  were  increased  correspondingly. 
An  ad-valorem  rate  of  twenty-five  per  cent,  was  levied  on 
them  ;  in  addition  they  paid  a  specific  duty  of  twelve 
cents  for  each  pound  of  cloth.  This  specific  duty  was 
intended  merely  to  com'pensate  the  manufacturers  for 
the  duty  on  wool,  while  the  ad-valorem  rate  alone  was  to 
yield  them  any  protection.  Tliis  is  the  first  appearance  in 
our  tariff  history  of  the  device  of  exact  compensating 
duties.  Compensation  for  duties  on  raw  materials  used 
by  domestic  producers  had  indeed  been  provided  for  in 


42  HISTORY  OF  THE  EXISTING  TARIFF. 

previous  tariffs ;  but  it  was  not  until  the  passage  of  the 
Morrill  act  and  of  its  successors  that  it  came  to  be  applied 
in  this  distinct  manner.  As  the  principle  of  compensa- 
tion has  been  greatly  extended  since  1861,  and  is  the  key 
to  the  existing  system  of  woollen  duties,  it  may  be  well  to 
explain  it  with  some  care. 

It  is  evident  that  a  duty  on  wool  must  normally  cause 
The  the  Pri°e  °f  a^  wool  that  is  imported  to 
compensating  rise  by  the  full  extent  of  the  duty.  More- 
over, the  duty  presumably  causes  the  wool 
grown  at  home,  of  the  same  grade  as  that  imported, 
also  to  rise  in  price  to  the  full  extent  of  the  tax.  It 
is  clear  that,  if  foreign  wool  continues  to  be  imported, 
such  a  rise  in  the  price  of  domestic  wool  rjiust  take  place ; 
since  wool  will  not  be  imported  unless  the  price  here  is 
higher,  by  the  amount  of  the  duty,  than  the  price  abroad. 
It  may  happen,  of  course,  that  the  tax  will  prove  prohibi- 
tory, and  that  the  importation  of  foreign  wool  will  cease ; 
in  which  case  it  is  possible  that  the  domestic  wool  is 
raised  in  price  by  some  amount  less  than  the  duty,  and 
even  possible  that  it  is  not  raised  in  price  at  all.  Assum- 
ing for  the  present  (and  this  assumption  was  made  in 
arranging  the  compensating  system)  that  domestic  wool 
does  rise  in  price,  by  the  extent  of  the  duty,  as  compared 
with  foreign  wool,  it  is  evident  that  the  American  manu- 
facturer, whether  using  foreign  or  domestic  wool,  is  com- 
pelled to  pay  more  for  his  raw  material  than  his  com- 
petitor abroad.  This  disadvantage  it  becomes  necessary 


HOW  DUTIES  WERE  RAISED.  43 

to  offset  by  a  compensating  duty  on  foreign  woollens. 
In  1861  the  duty  on  wool  of  the  kind  chiefly  used  in  this 
country  (costing  abroad  between  ten  and  twenty-four 
cents  a  pound)  was  three  cents  a  pound.  The  compen- 
sating duty  for  this  was  made  twelve  cents  a  pound  on 
the  woollen  cloth,  which  tacitly  assumes  that  about  four 
pounds  of  wool  are  used  for  each  pound  of  cloth.  This 
specific  duty  was  intended  to  put  the  manufacturer  in  the 
same  situation,  as  regards  foreign  competition,  as  if  he 
got  his  wool  free  of  duty.  The  separate  ad-valorem  duty 
of  twenty-five  per  cent,  was  then  added  in  order  to  give 
protection. 

The  compensating  system  was  retained  in  the  acts  of 
1862  and  1864.     During  the  war,  it  is  needless  to  say,  the 
duties  on  wool  and  woollens  were   considerably  raised. 
They  were  increased,  and  to   s'ome   extent  properly  in- 
creased, to  offset  the  internal  taxes   and   the  increased 
duties  on  dye-stuffs  and    other  materials;  and  care  was 
taken,    in    this    as    in    other    instances,    that    Wool  and 
the  increase  in  the  tariff  should  be  sufficient  woollen  du- 
and  more  than    sufficient   to  prevent  the   do- 
mestic  producer   from   being   unfairly   handicapped     by 
the  internal  taxes.     In  the  final  act  of  1864  the   duties 
on  wool  were  as  follows : 

On  wool  costing  12  cents  or  less,  a  duty  of  3  cents  per  pound. 
"       "         "       between  12  and  24  cents,  a  duty  of  6  cents  per  pound. 

24  and  32  cents,  a  duty  of  10  cents  per  pound, 
plus  ten  per  cent.* 

On  wool  costing  more  than  32  cents,  a  duty  of  12  cents  per  pound,  plus  ten 
per  cent.1 

1  Exactly  how  this  duty  on  wool  of  ten  per  cent,  on  the  value,  in  addition. 


44  HISTORY  OF  THE  EXISTING  TARIFF. 

The  wool  chiefly  imported  and  chiefly  used  by  our 
manufacturers  was  that  of  the  second  class,  costing 
between  twelve  and  twenty-four  cents  per  pound,  and 
paying  a  duty  of  six  cents.  The  compensating  duty  on 
woollens  was  therefore  raised  in  1864  to  twenty-four 
cents  per  pound  of  cloth.  The  ad-valorem  (protective) 
duty  on  woollens  had  been  raised  to  forty  per  cent. 

During  the  war  the  production  of  wool  and  woollens 
had  been  greatly  increased.  The  check  to  the  manufacture 
of  cotton  goods,  which  resulted  from  the  stoppage  of  the 
great  source  of  supply  of  raw  cotton,  caused  some  in- 
crease in  the  demand  for  woollens.  The  government's  need 
of  large  quantities  of  cloth  for  army  use  was  also  an  im- 
portant cause.  After  the  war,  a  revolution  was  threatened. 
Cotton  bade  fair  to  take  its  former  place  among  textile 
goods ;  the  government  no  longer  needed  its  woollens,  and 
threw  on  the  market  the  large  stocks  of  army  clothing 
which  it  had  on  hand.  In  the  hope  of  warding  off  the  immi- 
nent depression  of  their  trade,  the  wool  growers  and  manu- 
facturers made  an  effort  to  obtain  still  further  assistance 
from  the  government.  A  convention  of  wool  growers  and 
manufacturers  was  held  in  Syracuse,  N.  Y.,  in  December, 
1865.  That  both  these  classes  of  producers,  as  a  body,  un- 
derstood and  supported  the  views  of  this  meeting,  is  not  at 
all  certain.  The  mass  of  wool  growers  undoubtedly  knew 

to  the  specific  duty,  came  to  be  imposed,  the  writer  has  never  seen  satisfac- 
torily explained.  It  probably  came  into  the  tariff  in  connection  with  the 
discriminating  duty  of  ten  per  cent,  which  was  imposed  on  goods  imported 
in  the  vessels  of  nations  that  had  no  treaty  of  commerce  with  us. 


HOW  DUTIES  WERE  RAISED.  45 

nothing  of  it ;  they  were  represented  chiefly  by  a  few  breed- 
ers of  sheep.  Among  the  manufacturers,  many  held  aloof 
from  it  when  its  character  became  somewhat  more  plain. 
There  is  good  evidence  to  show  that  the  whole  movement 
was  the  work  of  a  few  energetic  manufacturers  of 
New  England,  engaged  chiefly  in  producing  carpets  and 
worsted  goods,  and  of  some  prominent  breeders  of  sheep.1 
The  fact  that  the  rates  of  duty,  as  arranged  by  the 
Syracuse  convention,  were  especially  advantageous  to 
certain  manufacturers — namely,  those  who  made  carpets, 
worsted  goods,  and  blankets, — tends  to  support  this  view. 
On  the  surface,  however,  the  movement  appeared  to  be 
that  of  the  growers  and  manufacturers  united.  The 
latter  agreed  to  let  the  wool  producers  advance  the  duty 
on  the  raw  material  to  any  point  they  wished  ;  they  under- 

1  "  This  tariff  (of  1867)  was  devised  by  carpet  and  blanket  makers,  who 
pretended  to  be  '  The  National  Woollen  Manufacturers'  Association,'  in 
combination  with  certain  persons  who  raised  fine  bucks  and  wished  to  sell 
them  at  high  prices,  and  who  acted  in  the  name  of  '  The  National  Wool- 
Growers'  Association.'  *  *  *  A  greater  farce  was  never  witnessed 
*  *  *  Many  who  took  part  in  the  proceedings  of  1866,  finding  that  the 
Association  [of  Wool  Manufacturers]  was  used  for  the  convenience  of  spe- 
cial interests,  have  since  withdrawn." — Harris,  "  Memorial,"  pp.  22,  23. 

Mr.  Harris  says  elsewhere:  "The  carpet  interest  was  predominant  [in 
the  Wool  Manufacturers'  Association].  *  *  *  The  President  was,  and 
is  now  (1871),  a  large  carpet  manufacturer  ;  and  the  Secretary  was  a  very 
talented  and  astute  politician,  from  Washington,  chosen  by  the  influence  of 
the  President."  And  again:  "The  Association  having  spent  considerable 
sums  in  various  ways  peculiar  to  Washington  (the  italics  are  Mr.  Harris's) 
increased  the  annual  tax  on  its  members  very  largely  |  and  at  the  present 
time  (1871)  it  is  hopelessly  in  debt  to  its  President." — "Protective  Duties," 
pp.  9,  10  ;  "  The  Tariff,"  p.  17.  See  also  "  Argument  on  Foreign  Wool 
Tariff  before  Finance  Committee  of  Senate,"  New  York,  1871. 


46  HISTORY  OF  THE  EXISTING  TARIFF. 

took,  by  means  of  the  compensating  device,  to  preveht 
any  injury  to  themselves  from  the  high  duty  on  the 
wool  they  used.  The  tariff  schedule  which  was  the  result 
of  this  combination  was  approved  by  the  United  States 
Revenue  Commission.1  It  was  made  a  part  of  the  unsuc- 
cessful tariff  bill  of  1867,  already  referred  to2  ;  and  when 
that  bill  failed,  it  was  made  law  by  a  separate  act,  to 
whose  passage  no  particular  objection  seems  to  have  been 
made.  The  whole  course  of  events  forms  the  most  strik- 
ing example — and  such  examples  are  numerous — of  the 
manner  in  which,  in  recent  tariff  legislation,  regard  has 
been  had  exclusively  to  the  producer.  Here  was  an  in- 
tricate and  detailed  scheme  of  duties,  prepared  by  the 
producers  of  the  articles  to  be  protected,  openly  and 
avowedly  with  the  intention  of  giving  themselves  aid  ; 
and  yet  this  scheme  was  accepted  and  enacted  by  the 
National  Legislature  without  any  appreciable  change  from 
the  rates  asked  for,  and  without  question  as  to  its  effect 
on  the  people  at  large.8 

We  turn  now  to  examine  this  act  of  1867,  which  re- 
mained in  force  till  1883,  and  in  which  no  changes  of 

1  Mr.  Stephen  Colwell,  a  disciple  of  the  Carey  protectionist  school,  was 
the  member  of  this  commission  who  had  charge  of  the  wood  and  woollens 
schedule.      Mr.  Wells,  who  was  also  a  member  of  the   commission,  had 
nothing  to  do  with  this  part  of  the  tariff. 

2  Ante,  p.  21. 

8  The  proceedings  of  the  Syracuse  convention  may  be  found  in  full  in  the 
volume  of  "Transactions  of  the  Wool  Manufacturers"  ;  also  in  "  U.  S. 
Revenue  Report,  1866,"  pp.  360-419.  Mr.  Colwell's  endorsement  of  the 
scheme  is  also  in  "  U.  S.  Revenue  Report,  1866,"  pp.  347-356.  Mr.  Wells, 
in  his  report  of  1867,  sharply  criticised  the  act  as  passed. 


HOW  DUTIES  WERE  RAISED.  47 

great  importance  are  made  by  the  existing  tariff.  In  this 
examination  we  will  follow  the  statement  published  in 
1866,  in  explanation  of  the  new  schedule,  by  the  Execu- 
tive Committee  of  the  National  Association  of  Wool 
Manufacturers.1  To  begin  with,  the  duties  Act  of  l86 
on  wool  were  arranged  on  a  new  plan.  Wool  Duty  on 
was  divided  into  three  classes:  carpet,  cloth- 
ing, and  combing  wool.2  The  first  class,  carpet  wool, 
corresponded  to  the  cheap  wools  of  the  tariff  of 
1864.  The  duty  was  three  cents  a  pound  if  it  cost 
twelve  cents  or  less,  and  six  cents  a  pound  if  it  cost 
more  than  twelve  cents.  The  other  two  classes,  of  cloth- 
ing and  combing  wools,  are  the  grades  chiefly  grown  in 
this  country,  and  therefore  are  most  important  to  note  in 
connection  with  the  protective  controversy.  The  duties 
on  these  were  the  same  for  both  classes.  Clothing  and 
combing  wools  alike  were  made  to  pay  as  follows  : 

Value  32  cents  or  less,  a  duty  of    10  cents    per  pound  and  n  per  cent. 

ad  valorem. 

Value   more  than   32  cents,   a   duty  of    12    cents   per  pound  and  10  per 
cent,  ad  valorem.* 

1  See  "  Statement  of  the  Executive  Committee  of  the  Wool  Manufacturers 
Association  to  the  U.  S.  Revenue  Commisson,"  printed  in  "  Transactions," 
as  above  ;  also  printed  in  "  Revenue  Report  for  1866,"  pp.  441-460. 

3  Clothing  wool  is  of  comparatively  short  fibre  ;  it  is  carded 'as  a  preparation 
for  spinning  ;  it  is  used  for  making  cloths,  cassimeres,  and  the  other  common 
woollen  fabrics.  Combing  wool  is  of  longer  fibre  ;  it  is  combed  in  a  comb- 
ing machine  as  a  preparation  for  spinning  ;  and  it  is  used  in  making  worsted 
goods,  and  other  soft  and  pliable  fabrics. 

3  Here  again  we  have  the  rather  absurd  combination  of  specific  and  ad-va- 
lorem duties  on  wool.  In  the  act  of  1867,  there  is  the  further  complication 


48  HISTORY  OF  THE  EXISTING  TARIFF. 

Comparing  these  figures  with  the  rates  of  1864,  one  would 
not,  at  first  sight,  note  any  great  change.       In   1864,  wool 
costing  between  twenty-four  and  thirty-two  cents  had  been 
charged    ten    cents    per   pound    plus   ten   per   cent,    ad 
valorem  ;  and  wool  costing  more  than  thirty-two  cents  had 
paid  twelve  cents  a  pound  plus  ten  per  cent.    These  seem 
to  be  almost  exactly  the  rates  of  1867.     But  in  fact,  by 
the  change  in  classification,  a  very  considerable  increase 
in  the  duty  was  brought  about.     In  1867  a!/ wool  costing 
less  than  thirty-two  cents  was  made  to  pay  the  duty  of  ten 
cents  per  pound  and  eleven  per  cent.     In  1864  wool  cost- 
ing (abroad)  between  eighteen  and  twenty-four  cents  had 
been  charged  only  six  cents  per  pound.     This  is  the  class 
of  wool  chiefly  grown  in  the  United  States,  and  chiefly 
imported  hither;  and   it  was  charged  in    1867  with  the 
duty  of  ten  cents  and   eleven  per  cent.     With  the  ad- 
valorem  addition,  the  duty  of  1867  amounted  to  eleven 
and   a  half  or  twelve   cents   a  pound,   or  about    double^ 
the  duty  of  1864.     The  consequence  was  that  in  reality 
the  duty  on   that   grade   of   wool  which  is  chiefly  used 
in  this  country  was  nearly  doubled  by  the  act  of  1867  ;  and 
the  increase  was  concealed  under  a  change  in  classification. 
The  duty   on  clothing  and    combing  wools,   as  fixed   in. 

that  the  ad-valorem  duty  is  in  the  one  case  ten  per  cent.,  in  the  other  eleven 
per  cent.  This  difference  resulted  by  accident,  as  the  writer  has  been  in- 
formed, from  the  need  of  complying  technically  with  certain  parliamentary 
rules  of  the  House.  It  is  hardly  necessary  to  say  that  this  mixture  of  specific 
and  ad-valorem  duties  on  wool  has  no  connection  with  the  compensating 
system.  The  compensating  scheme  accounts  only  for  the  two  kinds  of 
duties  on  woollen  goods. 


HOW  DUTIES  WERE  RAISED.  49 

1867,  has  been  on  the  average  more  than  fifty  per  cent,  on 
the  value  abroad. 

The  duty  on  wool  being  fixed  in  this  way,  that 
on  woollens  was  arranged  on  the  following  The  duty  on 
plan.  It  was  calculated  that  four  pounds  woollen 
of  wool  (unwashed)  were  needed  to  produce 
a  pound  of  cloth.  The  duty  on  wool,  as  has  been  ex- 
plained, amounted  to  about  eleven  and  one  half  cents 
a  pound,  taking  the  specific  and  ad-valorem  duty  to- 
gether. Each  of  v&ie  four  pounds  of  wool  used  in  mak- 
ing a  pound  of  cloth,  paid,  if  imported,  a  duty  of  four  times 
eleven  and  one  half  cents,  or  forty-six  cents.  If  home, 
grown  wool  was  used,  the  price  of  this,  it  was  assumed, 
was  equally  raised  by  the  duty.  The  manufacturer  in 
either  case  paid,  for  the  wool  used  in  making  a  pound  of 
cloth,  forty-six  cents  more  than  his  foreign  competitor. 
For  this  disadvantage  he  must  be  compensated.  More- 
over, the  manufacturer  in  the  United  States,  in  1867,  paid 
duties  on  drugs,  dye-stuffs,  oils,  etc.,  estimated  to  amount 
to  two  and  one  half  cents  per  pound  of  cloth.  For  this 
also  he  must  be  compensated.  In  addition  he  must  have 
interest  on  the  duties  advanced  by  him  ;  for  between  the 
time  when  he  paid  the  duties  on  the  wool  and  other 
materials,  and  the  time  when  he  was  reimbursed  by  the 
sale  of  his  cloth,  he  had  so  much  money  locked  up.  Add 
interest  for,  say  six  months,  and  we  get  the  final  total  of 
the  duty  necessary  to  compensate  the  manufacturer  for 
what  he  has  to  pay  on  his  raw  materials.  The  account 
stands : 


50  HISTORY  OF  THE  EXISTING  TARIFF. 

Duty  on  4  pounds  of  wool  at  n^  cents     ...         46     cents 
"      "  oils,  dye-stuffs,  etc.      .         .         .         .         .  2^     " 

Interest 4^     " 

Total 53 

Congress  did  not  accept  the  exact  figure  set  by  the 
woollen  makers.  It  made  the  compensating  duty  fifty 
cents  per  pound  of  cloth  instead  of  fifty-three ;  but  this 
change  was  evidently  of  no  material  importance.  The 
woollen  manufacturers  got  substantially  all  that  they 
wanted.  It  will  be  remembered  that  in  1864  the  com- 
pensating specific  duty  on  cloth  had  been  only  twenty- 
four  cents  per  pound. 

The  ad-valorem  duty  was  fixed  at  thirty-five  per  cent. 
The  woollen  manufacturers  said  they  wanted  a  "  net  effec- 
tive protection  "  of  only  twenty-five  per  cent.1  This  does 
not  seem  immoderate.  But  ten  per  cent  ad-valorem  was 
supposed  to  be  necessary  to  compensate  for  the  internal 
taxes,  which  were  still  imposed  in  1867,  though  abolished 
very  soon  after.  This  ten  per  cent.,  added  to  the  desired 
protection  of  twenty-five  per  cent,  brought  the  ad-valorem 

1  "  All  manufactures  composed  wholly  or  in  part  of  wool  or  worsted  shall 
be  subjected  to  a  duty  which  shall  be  equal  to  twenty-five  per  cent,  net ; 
that  is,  twenty-five  per  cent,  after  reimbursing  the  amount  paid  on  account 
of  wool,  dye-stuffs,  and  other  imported  materials,  and  also  the  amount  paid 
for  the  internal  revenue  tax  imposed  on  manufactures  and  on  the  supplies 
and  materials  used  therefor."  Joint  Report  of  Wool  Manufacturers  and  Wool 
Growers,  "Revenue  Report,  for  1866,"  p.  430 ;  also  in  "Transactions." 
The  Executive  Committee  of  the  Wool  Manufacturers'  Association  said,  in 
1866  :  ' '  Independently  of  considerations  demanding  a  duty  on  wool,  the 
wool  manufacturers  would  prefer  the  total  abolition  of  specific  duties,  pro- 
vided they  could  have  all  their  raw  material  free,  and  an  actual  net  protec- 
tion of  twenty-five  percent."  Harris,  "  Memorial,"  p.  9. 


HOW  DUTIES  WERE  RAISED.  51 

rate  to  thirty-five  per  cent.  The  final  duty  on  woollen 
cloth  was  therefore  fifty  cents  per  pound  and  thirty-five 
per  cent,  ad  valorem  :  of  which  the  fifty  cents  was  com- 
pensation for  duties  on  raw  materials  ;  ten  per  cent,  was 
compensation  for  internal  tax ;  and  of  the  whole  accumu- 
lated mass  only  twenty-five  per  cent,  was  supposed  to  give 
protection  to  the  manufacturer. 

This  duty  was  levied  on  woollen  cloths,  woollen  shawls, 
and  manufactures  of  wool  not  otherwise  provided  for — 
categories  which  include  most  of  the  woollen  goods  made 
in  this  country.  On  other  classes  of  goods  the  same  sys- 
tem was  followed.  An  ad-valorem  duty  of  Duty 
thirty-five  per  cent,  was  imposed  in  all  cases  ;  on  flannels» 

carpets, 

twenty-five  per  cent,  being  intended  to  be  <jress  goods, 
protection,  and  ten  per  cent,  compensation  for  etc- 
internal  taxes.  The  specific  duty  varied  with  different 
goods,  but  in  all  cases  was  supposed  merely  to  offset 
the  import  duties  on  wool  and  other  supplies.  For  in- 
stance, on  flannels,  blankets,  and  similar  goods,  the  spe- 
cific duty  varied  from  fifty  cents  a  pound  to  twenty  cents, 
being  made  to  decrease  on  the  cheaper  qualities  of  goods, 
as  less  wool,  or  cheaper  wool,  was  used  in  making  a  pound 
of  flannel  or  blanket.  The  duties  on  knit  goods  were  the 
same  as  those  on  blankets.  On  carpets  the  system  was 
applied  with  some  modification.  The  specific  duty  was 
levied  here  by  the  square  yard,  and  not  by  the  pound. 
A  calculation  was  made  of  the  quantity  of  wool,  linen, 
yarn,  dye-stuffs,  and  other  imported  articles  used  for  each 


52  HISTORY  OF  THE  EXISTING  TARIFF. 

yard  of  carpet ;  the  total  duties  paid  on  these  materials, 
with  interest  added  as  in  the  case  of  cloth,  gave  the  com- 
pensating duty  per  yard  of  carpet.  On  this  basis,  for  in- 
stance, the  specific  duty  on  Brussels  carpets  was  made 
forty-four  cents  per  yard  (the  manufacturers  had  asked  for 
a  duty  of  forty-eight  cents) ;  the  ad-valorem  duty  of 
thirty-five  per  cent,  being  of  course  also  imposed.  In  the 
same  way  the  specific  duty  on  dress  goods  for  women's 
and  children's  wear  was  made  from  six  to  eight  cents  per 
yard,  according  to  quality.  It  is  evident  that  the  task  of 
making  the  specific  duty  exactly  compensate  for  the  duties 
on  wool  was  most  complicated  in  these  cases,  and  that 
any  excess  of  compensation  would  here  be  most  difficult 
of  discovery  for  those  not  very  familiar  with  the  details  of 
the  manufacture.  As  a  matter  of  fact,  it  is  precisely  in 
these  schedules  of  the  woollens  act  that,  as  we  shall  see, 
the  "  compensating  "  system  was  used  as  a  means  of  secur- 
ing a  high  degree  of  protection  for  the  manufacturer. 

These  duties,  ad  valorem  and  specific  taken  together, 
have  been  from  fifty  to  one  hundred  per  cent.,  and  even 
more,  on  the  cost  of  the  goods.  On  cloths  generally  they 
have  been  from  sixty  to  seventy  per  cent,  on  the  value. 
On  blankets  and  flannels  they  have  been  from  eighty  to 
one  hundred  per  cent.,  and  have  been  entirely  prohibitory 
of  importation.  On  dress  goods  they  have  been  from 
sixty  to  seventy  per  cent.  ;  on  Brussels  carpets  again 
from  sixty  to  seventy  per  cent.  ;  and  on  ingrain  carpets 
from  fifty  to  fifty-five  per  cent.  Yet  a  net  protection  of 


HOW  DUTIES  WERE  RAISED.  53 

twenty-five  per  cent,  is  all  that  the  manufacturers  asked 
for  and  were  intended  to  have;  and  the  question  naturally 
presents  itself,  did  they  not  in  fact  get  more  than  twenty- 
five  per  cent.  ? 

The  first  conclusion  that  can  be  drawn  from  this  expla- 
nation of  the  woollens  duties  is  that  there  was  at  all 
events  no  good  reason  for  the  permanent  retention  of  the 
ad-valorem  rate  of  thirty-five  per  cent.  Of 

Comment 

that  rate  ten  per  cent,  was  in  all  cases  meant       on  the 
to  compensate  for  the  internal  taxes.     These   ad-valorem 
disappeared    entirely    within    a   year    or    two 
after  the  woollens  act  was  passed.      Yet  the  ad-valorem 
rate  on  woollens  remained  at  thirty-five  per  cent,  without 
change  from  1867  to  1883.     In  the  present  tariff,  that  of 
1883,  it   still  is  thirty-five  per  cent,  in  most  cases;  and 
where  it  has  been  changed  at  all,  it  has  even  been  raised  to 
forty  per  cent.     There  is  no  more  striking  illustration  of 
the  way  in  which  duties  which  were  imposed  in  order  to 
offset   the    internal   taxes  of  the   war  period,  have  been 
retained  and  have  become  permanent  parts  of  our  tariff 
system,  although  the  original  excuse  for  their  imposition 
has  entirely  ceased  to  exist. 

It  may  seem  that  the  retention  of  the  specific  duties 
on  woollens   was   justified,    since    the    duties  Comment  on 
on   wool   were   not  changed.     It   is   true  that  the  specific 
the  duties  on   dye-stuffs,   drugs,  and    such   ar- 
ticles   have    been    abolished    or    greatly    reduced    since 
1867  ;  but  these  played  no  great  part  in  the  determina- 


54  HISTORY  OF  THE  EXISTING  TARIFF. 

tion  of  the  specific  duty.  The  duties  on  wool  were 
not  changed  till  the  passage  of  the  act  of  1883.  There 
are,  however,  other  .grounds  for  criticising  the  specific 
duties  on  woollens,  which  have  been  in  fact  not  merely 
compensating,  but  have  added,  in  most  cases,  a  consider- 
able degree  of  protection  to  the  "  net  "  twenty-five  per 
cent,  which  the  act  of  1867  was  supposed  to  give  the 
manfacturers. 

The  compensating  duties,  as  we  have  seen,  were  based 
on  two  assumptions :  first,  that  the  price  of  wool,  whether 
foreign  or  domestic,  was  increased  by  the  full  extent  of 
the  duty  ;  second,  that  four  pounds  of  wool  were  used  in 
making  a  pound  of  cloth.  The  first  assumption,  however, 
holds  good  only  to  a  very  limited  extent.  A  protective 
duty  does  not  necessarily  cause  the  price  of  the  protected 
article  to  rise  by  the  full  extent  of  the  duty.  It  may  be 
prohibitory;  the  importation  of  the  foreign  article  may 
entirely  cease ;  and  the  domestic  article,  while  its  price  is 
raised  to  some  extent,  may  yet  be  dearer  by  an  amount  less 
than  the  duty.  This  is  what  has  happened  with  regard  to 
most  grades  of  wool.  The  commoner  grades  of  wool  are 
raised  in  this  country  with  comparative  ease.  The  duty 
on  them  is  prohibitory,  and  their  importation  has  ceased. 
Their  price,  though  higher  than  that  of  similar  wools 
abroad,  is  not  higher  by  the  full  extent  of  the  duty.  It  is 
true  that  the  importation  of  finer  grades  of  clothing  and 
combing  wools  pontinues  ;  and  it  is  possible  that  the  wools 
of  Ohio,  Michigan,  and  other  States  east  of  the  Mississippi 


HOW  DUTIES  WERE  RAISED.  55 

are  higher  in  price,  by  the  full  amount  of  the  duty,  than 
similar  wools  abroad.  Even  this  is  not  certain  ;  for  the 
wools  which  continue  to  be  imported  are  not  of  precisely 
the  same  class  as  the  Ohio  and  Michigan  wools.  As  a 
rule,  the  importations  are  for  exceptional  and  peculiar  pur- 
poses, and  do  not  replace  or  compete  with  domestic  wools. 
At  all  events,  it  is  certain  that  the  great  mass  of  wools 
grown  in  this  country  are  entirely  shielded  from  foreign 
competition.  Their  price  is  raised  above  the  foreign 
price  of  similar  material ;  but  raised  only  by  some  amount 
less  than  the  duty.  The  manufacturer,  however,  gets  a 
compensating  duty  in  all  cases  as  if  his  material  were 
dearer,  by  the  full  extent  of  the  duty,  than  that  of  his 
foreign  competitor.  The  bulk  of  the  wool  used  by  Ameri- 
can manufacturers  does  not  show  the  full  effect  of  the 
tariff,  and  the  manufacturers  clearly  obtain,  in  the  specific 
duty,  more  compensation  than  the  higher  price  of  their 
wool  calls  for.  The  result  is  that  this  duty,  instead  of 
merely  preventing  the  domestic  producer  from  being  put 
at  a  disadvantage,  yields  him  in  most  cases  a  considerable 
degree  of  protection,  over  and  above  that  given  by  the 
ad-valorem  duty.1 

There  is  another  way  in  which  the  compensating  duty 
is  excessive.  A  very  large  quantity  of  woollen  goods  are 

1  See  the  instructive  remarks  of  Mr.  John  L.  Hayes,  in  Bulletin  Wool 
Manufacturers  vol.  xiii.  pp.  98—108.  Cf.  "  Tariff  Comm.  Report,"  pp. 
1782—1785.  The  production  and  importation  of  wool  in  different  parts  of 
the  country  for  a  series  of  years  are  given  in  some  detail  in  "  Tariff 
Comm.  Report,"  pp.  2435,  2436. 


56  HISTORY  OF  THE  EXISTING  TARIFF. 

not  made  entirely  of  wool.  Cotton,  shoddy,  and  other 
substitutes  are  in  no  inconsiderable  part  the  materials  of 
the  clothes  worn  by  the  mass  of  the  people.  In  these 
goods  very  much  less  than  four  pounds  of  wool  is  used  in, 
making  a  pound  of  cloth,  and  the  specific  duty  again 
yields  to  the  manufacturer  a  large  degree  of  protection. 

The  second  assumption  of  the  compensating  system, 
that  four  pounds  of  wool  are  used  in  making  a  pound  of 
cloth,  is  also  open  to  criticism.  The  goods  in  which 
cotton  and  shoddy  are  used  clearly  do  not  require  so 
much  wool.  But  it  is  probable  that  even  with  goods 
made  entirely  of  wool,  the  calculation  of  four  pounds  of 
unwashed  wool  for  each  pound  of  cloth  is  very  liberal. 
Wool,  unwashed,  shrinks  very  much  in  the  cleaning  and 
scouring  which  it  must  receive  before  it  is  fit  for  use  ; 
and  the  loss  by  wear  and  waste  in  the  processes  of  manu- 
facture is  also  considerable.  The  shrinkage  in  scouring  is 
subject  to  no  definite  rule.  In  some  cases  wool  loses  only 
forty  per  cent,  of  its  weight  in  the  process,  in  others  as 
much  as  seventy-five  percent.  The  shrinkage  in  scouring 
on  American  wools  is  rarely  more  than  sixty  per  cent; 
and  if  to  this  is  added  a  further  loss  of  twenty-five  per 
cent,  in  manufacture,  there  will  be  needed  for  a  pound  of 
cloth  no  more  than  three  and  one  third  pounds  of  wool.1 

1  See,  as  to  the  loss  of  wool  in  scouring,  Quarterly  Report  Bureau  of  Sta- 
tistics, for  quarter  ending  June  30,  1884,  pp.  563-565  ;  Harris,  "  Memorial," 
p.  n  ;  Schoenhof,  "  Wool  and  Woollens,  "p.  10  ;  Bulletin  WoolMf.,\o\.  xiii., 
p.  8.  The  least  loss  I  have  found  mentioned  is  twenty-five  per  cent,  (coarse 
Ohio),  and  the  highest  seventy  per  cent.  (Buenos  Ayres  wool).  Ordinaiy 


HOW  DUTIES  WERE  RAISED,  57 

With  the  great  majority  of  goods  made  in  this  country, 
the  shrinkage  and  the  loss  in  manufacture  do  not  amount 
to  more  than  this.  The  calculation  of  four  for  one  is  for 
most  American  goods  a  liberal  one  ;  and  it  is  evident  that 
the  compensating  duty,  based  on  this  liberal  calculation, 
yields  a  degree  of  protection  in  the  same  way  that  it  does 
on  goods  that  contain  cotton  or  shoddy.  On  the  other 
hand,  there  are  some  grades  of  imported  wool  on  which 
the  shrinkage  and  loss  in  manufacture  are  so  great  that 
the  compensating  duty  is  not  excessive.  Some  grades  of 
Australian  wool,  which  are  imported  for  manufacturing 
fine  goods  and  worsteds,  are  subject  to  exceptional 
shrinkage  and  to  exceptional  waste  in  the  process  of 
manufacture.  Of  this  class  of  wool  four  pounds,  and 
sometimes  a  little  more,  are  apt  to  be  used  for  a  pound 
of  cloth.1  In  such  cases  the  compensating  duty  evidently 

American  wool  loses  between  fifty  and  sixty  per  cent,  in  scouring.  The  loss 
in  weight  in  manufacturing  varies  much  with  the  processes,  but  with  care 
will  not  exceed  twenty-five  per  cent.  With  most  goods  it  is  less. 

If  the  loss  in  scouring  100  Ibs.  of  wool  is  sixty  per 

cent.,  there  remain      .....         40  Ibs.  scoured  wool. 

Deduct  twenty-five  per  cent,  for  loss  in  manufacture  10  Ibs. 

Leaves  .         .         30  Ibs.  of  cloth, 

or  i  Ib.  of  cloth  for  3|  Ibs.  of  wool. 

If  the  loss  in  scouring  100  Ibs.  of  wool  is  sixty-five 

per  cent,  there  remain          ....          35  Ibs.  scoured  wool. 
Deduct  twenty-five  per  cent,  for  loss  in  manufacture 

Sflbs. 

Leaves  .         .         .         26^  Ibs.  of  cloth, 
or  i  Ib.  cloth  for  not  quite  4  Ibs.  of  wool. 

1  See  the  instances  given  by  Mr.  Hayes  in  Wool  Manufacturers'  Bulletin, 
vol.  xii.,  pp.  4-9.  These  all  refer  to  Australian  wool,  which,  as  Mr.  Hayes 
says  elsewhere  {ibid.,  p.  107),  is  imported  in  comparatively  small  quantities 
for  exceptional  purposes. 


58  HISTORY  OF  THE  EXISTING  TARIFF. 

may  fail  to  counterbalance  entirely  the  disadvantage 
under  which  the  manufacturer  labors  in  the  higher  price 
of  his  raw  material ;  for  the  wool,  being  imported  into 
this  country,  and  paying  the  duty,  must  be  higher  in  price 
by  the  full  amount  of  the  duty  than  the  same  wool  used 
by  the  foreign  producer.  In  other  words,  there  are  cases 
where  the  specific  duty  is  not  sufficient  to  offset  the  duty 
on  the  raw  material.  It  is  probable  that  this  fact  ex- 
plains, in  part  at  least,  the  regular  importation  of  certain 
dress  goods  and  finer  grades  of  cloths,  which  continue  to 
come  into  the  country  from  abroad  in  face  of  the  very 
heavy  duty.  But  such  cases  are  exceptional.  For  most 
goods  made  in  the  United  States  the  compensating  duty 
on  the  four  to  one  basis  is  excessive. 

One  other  provision  in  the  act  of  1867  may  be  pointed 
out,  which  bears  on  the  calculation  of  four  pounds  of  wool 
to  one  pound  of  cloth,  and  at  the  same  time  illustrates 
the  spirit  in  which  the  act  was  prepared.  It  has  already 
been  said  that  the  duty  on  wool  is  laid  on  unwashed  wool ; 
and  the  compensating  duty  is  fixed  on  the  calculation 
that  it  requires  four  pounds  of  unwashed  wool  to  make  a 
pound  of  cloth.  The  act  of  1867  provided  that  clothing 
wool,  if  washed,  should  pay  double  duty,  and  if  scoured, 
treble  duty.  Similarly  combing  wool  and  carpet  wool 
were  made  to  pay  treble  duty  if  scoured.  But  no  provi- 
sion whatever  was  made  as  to  combing  and  carpet  wools 
if  washed ;  they  were  admitted  at  the  same  rate  of  duty 
whether  washed  or  unwashed.  This  amounted  practically 


HOW  DUTIES  WERE  RAISED.  59 

to  a  lowering  of  the  duty  on  them.  The  same  wool  which 
would  weigh,  if  unwashed,  one  and  one  half  pounds,  and 
would  be  charged  with  a  duty  of  twenty  cents,  would 
weigh,  if  washed,  only  about  a  pound,  and  would  pay  a 
duty  of  only  thirteen  cents.  The  result  was  that  combing 
and  carpet  wool  was  advantageously  imported  in  a  washed 
condition,  and  the  duty  was  in  effect  appreciably  below  the 
rate  on  unwashed  wool.  Yet  the  compensating  duty  on 
carpets,  worsteds,  and  all  goods  made  from  these  wools 
was  arranged  as  in  the  case  of  cloths,  as  if  the  full  rate 
on  unwashed  wool  were  levied.  The  manufacturer  got 
the  full  compensating  rate  on  his  product,  though  he  did 
not  pay  the  full  duty  on  his  wool.  It  is  a  well-known 
fact  that  this  anomaly  in  the  act  of  1867  was  due  chiefly 
to  a  prominent  manufacturer  of  New  England,  whose 
business,  as  a  consequence,  was  made  exceedingly  profita- 
ble during  the  years  immediately  succeeding  the  passage 
of  the  act.1 

If,  as  we  have  seen  the  case  to  be,  the  compensating 
duty  was  very  liberal  in  the  case  of  ordinary  woollen 
cloth,  where  the  calculations  on  which  it  was  founded  can 
be  checked  with  comparative  ease,  it  is  to  be  expected 

1  The  act  of  1883  maintains  without  change  the  admission  of  washed 
combing  wool  at  the  same  rates  of  unwashed.  The  great  profits  which  this 
state  of  things  enabled  certain  worsted  manufacturers  to  make  in  the  first 
instance,  have  been  brought  down  by  the  force  of  domestic  competition  ; 
and  a  considerable  industry  has  grown  up  on  the  basis  of  the  easy  admis- 
sion of  washed  wool.  It  would,  therefore,  hardly  be  wise  to  revert  from  it 
at  the  present  time.  But  its  insertion  in  the  original  act  is  very  characteris- 
tic of  the  spirit  in  which  the  compensating  scheme  was  devised. 


60  HISTOR  Y   OF  THE  EXISTING  TARIFF. 

that  other  schedules,  where  a  check  is  more  difficult  to 
apply,  will  also  contain  excessive  compensation.  The 
specific  duty  on  carpets  is  levied  by  the  yard  ;  tha*t  on 
Brussels  carpets,  for  instance,  was  forty-four  cents  a  square 
yard.  Similarly  the  specific  duty  on  dress-goods  was 
levied  by  the  square  yard.  That  on  blankets,  flannels, 
worsteds,  yarns,  etc.,  was  fixed  by  the  pound,  but  was 
made  to  vary  from  twenty  to  fifty  cents  a  pound,  accord- 
ing to  the  value  of  the  goods.  The  last-mentioned  goods, 
for  instance,  paid  a  duty  of  twenty  cents  a  pound  if  worth 
forty  cents  or  less  a  pound ;  a  duty  of  thirty  cents  if 
worth  between  forty  and  sixty  cents ;  and  so  on.  In 
every  case,  of  course,  the  ad-valorem  (nominally  protective) 
rate  of  thirty-five  per  cent,  was  added  to  the  specific 
duties.  It  is  evidently  a  very  complex  problem  whether 
these  "compensating"  duties  represent  the  exact  sum 
necessary  to  offset  the  increased  price  of  materials  due  to 
the  tariff  rates  on  wool,  hemp,  dye-stuffs,  and  other 
dutiable  articles  used  by  manufacturers.  We  have  seen 
that  the  movement  that  resulted  in  the  passage  of  the  act 
of  1867  was  brought  about  chiefly  by  the  manufacturers 
of  carpets  and  worsteds.  These  men  adjusted  the  specific 
duties,  and  alone  could  know  with  how  great  accuracy 
they  attained  their  object  of  compensation.  In  some  ir\- 
stances  it  was  confessed  that  there  was  more  than  comj 
pensation  in  their  scheme ;  this  was  admitted  to  be  the\ 
case  with  blankets  and  dress-goods.  On  all  goods  it  is 
not  to  be  doubted  that  a  liberal  allowance  was  made  in 


HOW  DUTIES  WERE  RAISED.  6 1 

favor  of  the  manufacturers,  and  that  the  specific  rates 
gave  them  a  great  amount  of  pure  and  simple  protection. 
The  truth  is  that  the  wool  and  woollens  schedule,  as  it 
was  enacted  in  1867,  and  as  it  now  remains  in  The  woollens 
force  with  the  modifications  made  in  1883,  is  a  act  aheavy 

protective 

great  sham.  Nominally,  it  makes  an  exact  di-  measure 
vision  between  protective  and  compensating  in  disguise, 
duties ;  and  nominally,  it  limits  the  protection  for  the 
manufacturer  to  twenty-five  (now  thirty-five)  per  cent. 
As  a  matter  of  fact,  no  one  can  tell  how  much  of  the 
different  duties  is  protective,  and  how  much  merely 
compensating.  So  complicated  is  the  schedule,  and  so 
varying  are  the  conditions  of  trade  and  manufacture,  that 
the  domestic  manufacturer  himself  finds  it  difficult  to  say 
exactly  how  great  a  degree  of  encouragement  the  govern- 
ment gives  him.  In  some  exceptional  cases  the  effectual 
protection  may  be  less  than  the  twenty-five  (now  thirty- 
five)  per  cent,  which  the  tariff  is  supposed  to  yield.  In 
the  great  majority  of  cases  it  is  very  much  more  than 
this,  and  was  meant  to  be  more.  The  whole  cumbrous 
and  intricate  system, — of  ad-valorem  and  specific  duties, 
of  duties  varying  according  to  the  weight  and  the  value 
and  the  square  yard, — was  adopted,  it  is  safe  to  say,  sim- 
ply because  it  concealed  the  degree  of  protection  which  in 
fact  the  act  of  1867  gave.  Duties  that  plainly  and  palpa- 
bly levied  taxes  of  60,  80,  and  100  per  cent,  would  hardly 
have  been  suffered  by  public  opinion  or  enacted  by  the 
legislature.  Probably  few  members  of  Congress  under- 


62  HISTORY  OF  THE  EXISTING  TARIFF. 

stood  the  real  nature  and  bearing  of  the  scheme ;  and  no 
attempt  was  made  to  check  the  calculations  of  the 
woollen  manufacturers,  or  to  see  whether,  intentionally  or 
by  accident,  abuses  might  not  have  crept  into  their  pro- 
posals. 

The   most    remarkable    fact    in    the    history   of    this 
piece  of   legislation  was  its   failure   to  secure 

Manu- 
facturers not  the  object  which  its  supporters  had   in  mind. 

benefited     Notwithstanding    the    very    great    degree    of 

by  the  act. 

protection  which  the  manufacturers  got,  the 
production  of  woollen  goods  proved  to  be  one  of  the 
most  unsatisfactory  and  unprofitable  of  manufacturing 
occupations.  As  a  rule,  a  strong  protective  measure 
causes  domestic  producers  to  obtain,  at  least  for  a  time, 
high  profits ;  though  under  the  ordinary  circumstances  of 
free  competition,  profits  are  sooner  or  later  brought  down 
to  the  normal  level.  But  in  the  woollen  manufacture  even 
this  temporary  gain  was  not  secured  by  the  home  producers 
after  the  act  of  1867.  A  few  branches,  such  as  the  pro- 
duction of  carpets,  of  blankets,  of  certain  worsted  goods, 
were  highly  profitable  for  some  years.  These  were  the 
branches,  it  will  be  remembered,  in  which  the  compensa- 
ting duties  were  most  excessive,  and  the  prominent  manu- 
facturers engaged  in  them  had  done  most  to  secure  the 
passage  of  the  act  of  1867.  Profits  in  these  branches 
were  in  course  of  time  brought  down  to  the  usual  level, 
and  in  many  instances  below  the  usual  level,  by  the  in- 
crease of  domestic  production  and  domestic  competition. 


HOW  DUTIES  WERE  RAISED.  63 

The  manufacture  of  the  great  mass  of  woollen  goods, 
however,  was  depressed  and  unprofitable  even  during  the 
years  immediately  following  the  act,  notwithstanding  the 
speculative  activity  and  superficial  prosperity  of  that 
time.1  Not  only  then,  but  throughout  the  period  between 
1867  and  the  present,  there  can  be  no  doubt  that  the 
manufacturers  have  been  steadily  complaining,  and  have 
steadily  found  it  difficult  to  make  even  average  profits  on 
their  goods.  One  great  cause  of  this  undoubtedly  has 
been  that  the  tariff  of  1867  gave  particularly  high  protec- 
tion on  the  cheaper  and  commoner  grades  of  goods,  and 
that  domestic  producers  have  been  tempted  to  devote 
themselves  too  exclusively  to  making  such  goods.  The 
high  duty  on  wool,  and  the  consequent  hampering  of  the 
manufacturer  in  the  choice  of  his  material,  have  tended 
in  the  same  direction.  The  majority  of  finer  woollen 
goods  are  at  present  imported,  and  the  manufacture  in 
this  country  is  confined  chiefly  to  cheaper  grades.  The 
competition  in  the  latter  has  been  keen,  and  the  produc- 
tion greater  than  the  market  can  easily  absorb.  The  en- 
tire absence  of  foreign  competition  has  at  the  same  time 
caused  the  machinery  and  methods  of  production  in  many 
mills  to  be  backward  and  inefficient. 

1  See  an  instructive  article,  by  a  manufacturer,  in  Bulletin  Nat.  Assoc. 
Wool  Mf.,  vol.  iii.,  p.  354  (1872).  "  There  is  one  thing  that  all  who  are 
interested  in  the  manufacture  will  agree  to,  that  for  the  last  five  years 
[from  1867  to  1872]  the  business  in  the  aggregate  has  been  depressed,  that 
the  profits  made  during  the  war  have  been  exhausted  mainly,  and  that  it 
has  been  extremely  difficult  during  all  this  time  to  buy  wool  and  manufac- 
ture it  into  goods  and  get  a  new  dollar  for  an  old  one." — Cf.  Mr.  Harris's 
pamphlets,  cited  above. 


64  HISTORY  OF  THE  EXISTING  TARIFF. 

Moreover,  the  unprosperous  state  of  the  manufacture 
has  had  a  depressing  effect  on  the  prices  of  wool  and  on 
the  wool  growers.  It  is  often  said  that  the  artificial  con- 
dition of  the  tariff,  in  causing  the  manufacturers  to  confine 
themselves  chiefly  to  cheap  goods,  has  prevented  the  wool 
growers  from  obtaining  any  benefit  whatever  from  the 
high  duties  on  their  material.  However  this  may  be,  it 
is  certain  that  the  expectations  of  the  woolgrowers, 
founded  on  the  act  of  1867,  were  greatly  disappointed. 
The  final  result  of  the  existing  system  has  been  an 
increase  of  cost  to  consumers,  without  any  'permanent 
benefit  to  producers.  There  can  be  little  doubt  that,  as 
a  whole,  and  in  the  long  run,  the  manufacture  would  have 
been  much  more  satisfactory  to  those  engaged  in  it  if 
they  had  been  content  with  that  which  they  declared  to 
be  their  only  object — a  net  protection  of  25  per  cent.  A 
tariff  admitting  wool  free  and  charging  woollens  with  a 
duty  of  25  per  cent,  would  have  saved  many  difficulties 
to  producers,  as  well  as  a  great  deal  of  heavy  taxation 
to  consumers.  Under  such  a  tariff  the  woollen  manufac- 
ture could  maintain  itself  at  the  present  time  in  almost 
every  one  of  its  branches ;  and  by  a  careful  and  gradual 
reduction  of  duties,  such  a  tariff  could  be  substituted 
for  the  existing  rates  within  five  years,  without  causing 
any  harmful  disarrangement  of  the  industry.1 

1  This  statement  (in  regard  to  the  effect  of  a  simple  25  per  cent,  duty) 
might  be  open  to  criticism  if  it  represented  merely  the  opinion  of  a 
"theorist."  The  writer  has  for  it,  however,  the  authority  of  Mr.  Rowland 
Hazard,  of  Providence,  R.  I.,  a  gentleman  with  wide  experience  as  a  manu- 


HOW  DUTIES  WERE  RAISED.  65 

The  woollens  act  of  1867  has  been  discussed  somewhat 
at  length  because  it  is  the  most  striking  illustration  of  the 
manner  in  which  protective  duties  were  advanced  after 
the  war  at  the  request  of  domestic  producers.  There  are 
not  a  few  other  cases  in  which  an  increase  of  duties 
beyond  the  level  reached  during  the  war  was  made. 

After  the  woollens  act,  perhaps  the  most  remarkable  is  the 

<"p"*\ 
copper  act  of  1869.     Before  that  year  the  duty  Co    eract 

on  copper  ore  had  been  five  per  cent.,  that  of  1869. 
on  copper  in  bars  and  ingots  had  been  two  and  a  half 
cents  per  pound.  Under  the  very  low  duty  on  copper 
ore  a  large  industry  had  grown  up  in  Boston  and  Balti- 
more. Ore  was  imported  from  Chili,  and  was  smelted 
and  refined  in  these  cities.  But  during  the  years  im- 
mediately preceding  1869  the  great  copper  mines  of 
Lake  Superior  had  begun  to  be  worked  on  a  considerable 
scale.  These  mines  are  probably  the  richest  sources 
of  copper  in  the  world,  and  under  normal  circum- 

facturer,  who  has  kindly  permitted  the  use  of  his  name  as  sanctioning  the 
text  on  this  point. 

It  is  not  part  of  the  object  of  this  volume  to  discuss  in  detail  the  economic 
effect  of  the  duties  on  wool  and  woollens.  The  reader  is  referred  to  a  dis- 
cussion of  the  original  scheme  in  Mr.  Wells's  "  Report  of  1866-67,"  PP-  5°- 
60  ;  also  to  Mr.  Wells's  "  Report  for  1869-70,"  pp.  xcii-cv.;  Wells,  "  Wool 
and  the  Tariff"  (1873);  Harris,  "Memorial  to  Committee  on  Ways  and 
Means"  (1872);  Schoenhof,  "Wool  and  Woolens"  (1883);  R.  Hazard, 
"Address  before  the  Washington  County  Agr.  Society"  (1884).  On  the 
other  side,  see  Bulletin  Wool  Manufacturers,  vol.  ii.,  pp.  19—34,  in 
reply  to  Wells's  remarks  in  1870  ;  "  Examination  of  Statements  in  the  Report 
of  the  Revenue  Commissioner,"  House  Rep.,  4ist  Congress,  2d  session, 
Report  No.  72  (1869-70)  ;  Bulletin  Wool  Mfr.,  vol,  xiii.,  p.  1-13  ;  "  Tariff 
Comm.  Report,"  pp.  2240-47,  2411-2440. 


66  HISTORY  OF  THE  EXISTING  TARIFF. 

*  stances  would  supply  the  United  States  with  this  metal 
more  cheaply  and  abundantly  than  any  other  country ; 
yet  through  our  tariff  policy  these  very  mines  have 
caused  us  for  many  years  to  pay  more  for  our  copper 
than  any  other  country.  The  increased  production  from 
these  mines,  with  other  circumstances,  had  caused  copper 
to  fall  in  price  in  1867  and  1868;  and  their  owners  came 
before  Congress  and  asked  for  an  increase  of  duties.  Cop- 
per ore  was  to  pay  three  cents  for  each  pound  of  pure  cop- 
per, equal  to  twenty-five  or  thirty  per  cent.,  in  place  of  the 
previous  duty  of  five  per  cent. ;  and  ingot  copper  was  to 
pay  five  cents  per  pound,  instead  of  two  and  a  half  cents. 
The  bill  making  these  changes  was  passed  by  both  houses. 
President  Johnson  refused  to  sign  it,  and  sent  in  a  veto 
message,  which  bore  marks  of  having  been  composed  by 
other  hands  than  his  own.  But  .the  President  was  then  per- 
haps the  most  unpopular  man  in  the  country ;  Congress 
had  got  a  habit  of  overriding  his  vetoes,  and  the  copper  bill 
was  passed  in  both  Houses  by  the  necessary  two-thirds 
vote,  and  became  law.1  A  more  open  use  of 'legislation 

1  The  veto  message  is  in  Congress.  Record,  1868-69,  P-  J46o.  It  was 
written  by  Mr.  David  A.  Wells,  as  that  gentleman  has  informed  the  writer. 
The  character  of  the  bill  was  made  clear  enough  in  the  course  of  the  debate, 
at  well  as  by  the  veto  message.  See  Brooks's  speech,  ibid.,  p.  1462.  The 
manner  in  which  this  bill,  and  others  of  the  same  kind,  were  carried  through 
Congress  is  illustrated  by  some  almost  naive  remarks  of  Mr.  Frelinghuysen  : 
"  My  sympathies  are  with  this  bill,  as  they  always  are  for  any  tariff  bill.  I 
confess,  however,  that  I  do  not  like  this  system  of  legislation,  picking  out 
first  wool,  then  copper,  then  other  articles,  and  leaving  the  general  manu- 
facturing interests  without  that  protection  to  which  they  are  entitled,  and 
thus  dividing  the  strength  which  those  great  interests  ought  to  have.  But 


HOW  DUTIES  WERE  RAISED.  67 

for  the  benefit  of  private  individuals  has  probably  never 
been  made.  The  effect  of  the  act  was,  in  the  first  place, 
to  destroy  the  smelting  establishments  which  had  treated 
the  Chilian  ores.  In  the  second  place,  it  enabled  the 
copper  producers  at  home  to  combine  and  to  settle  the 
price  of  their  product  without  being  checked  by  any  pos- 
sible foreign  competition.  It  is  a  well-known  fact  that 
the  mining  companies  of  Lake  Superior,  which  controlled 
until  within  a  year  or  two  almost  the  entire  production  of 
copper  in  the  United  States,  have  maintained  for  many 
years  a  combination  for  fixing  the  price  of  copper.  Their 
price  has  been  steadily  higher  than  the  price  of  copper 
abroad ;  and  when  they  have  found  it  impossible  to  dis- 
pose of  all  their  product  at  home  at  the  combination 
price,  large  quantities  have  been  sent  abroad  and  sold 
there  at  lower  prices,  in  order  to  relieve  the  home  market. 
Several  of  these  companies  have  paid  for  a  series  of  years 
enormous  profits — profits  due  in  part,  no  doubt,  to  the 
unsurpassed  richness  of  their  mines,  but  in  part  also  to  the 
copper  act  of  I869.1 

Still  another  instance  of  the  increase  of  duties  since  the 
war  is  to  be  found  in  the  case  of  steel  rails.  Before  1870 
steel  rails  had  been  charged  with  duty  under  the  head  of 

still,  if  a  bill  is  introduced  which  gives  protection  to  copper,  trusting  to  the 
magnanimity  of  the  Representatives  from  the  West  who  have  wool  and  cop- 
per protected,  I  should  probably  vote  for  the  bill." — Ibid.,  p.  161. 

1  On  the  effect  of  the  copper  act,  see  Mr.  Wells's  Essay,  already  referred 
to,  in  the  Cobden  Club  series,  pp.  518-521  Cf.  the  "  Report  of  the  Tariff 
Comm.,"  pp.  2554-2577.  See  also  Appendix,  V.,  where  the  total  pro- 
duction of  copper  in  each  year,  prices  at  home  and  abroad,  etc. ,  are  given. 


68  HISTORY  OF  THE  EXISTING  TARIFF. 

"manufacturers  of  steel  not  otherwise  provided  for,"  and 
Steel  rails,  as  such  had  paid  forty-five  per  cent.  The 
1870.  tariff  act  Of  jg^Q  changed  this  to  a  specific 
duty  of  \\  cents  per  pound,  or  $28  per  gross  ton. 
At  the  time,  the  change  caused  an  increase,  but  no 
very  great  increase,  in  the  duty.  The  Bessemer  process 
of  making  steel  had  hardly  begun  to  be  used  in  1870, 
and  the  price  of  steel  rails  at  that  time  in  England 
was  about  $50  per  ton.  The  ad-valorem  rate  of  forty- 
five  per  cent.,  calculated  on  this  price,  would  make  the 
duty  $22.50  per  ton,  or  not  very  much  less  than  the  duty 
of  $28  per  ton  imposed  by  the  act  of  1870.  Between 
1870  and  1873,  the  price  of  steel  rails  advanced  in  Eng- 
land, and  the  specific  duty  of  $28  imposed  in  the  former 
year  was  not  higher  than  the  ad-valorem  rate  of  forty-five 
per  cent,  would  have  been.  But  after  1873  the  prices  of 
Bessemer  steel  and  of  steel  rails  steadily  went  down.  As 
they  did  so,  the  specific  duty  became  heavier  in  propor- 
tion to  the  price.  By  1877  the  average  price  of  steel  rails 
in  England  was  only  a  little  over  $31  per  ton  ;  and  since 
1877  the  English  price  has  not  on  the  average  been  so 
high  as  $28  per  ton.  The  duty  of  $28,  which  this  country 
imposed,  has  therefore  been  equivalent  to  more  than  one 
hundred  per  cent  on  the  foreign  price.  The  result  of  this 
exorbitant  duty  was  an  enormous  gain  to  the  producers  of 
steel  rails  in  the  United  States.  The  patent  for  the  use  of 
the  Bessemer  process  was  owned  by  a  comparatively  small 
number  of  companies  ;  and  these  companies,  aided  by  a 


HOW  DUTIES  WERE  RAISED.  69 

patent  at  home  and  protected  by  an  enormous  duty 
against  foreign  competitors,  were  enabled  for  a  time  to  ob- 
tain exceedingly  high  prices  for  steel  rails.  During  the 
great  demand  for  railroad  materials  which  began  on  the 
revival  of  business  in  1879,  and  continued  for  several 
years  thereafter,  the  prices  of  steel  rails  were  advanced  so 
.high  that  English  rails  were  imported  into  this  country 
even  though  paying  the  duty  of  one  hundred  per  cent. 
During  this  time  the  price  in  England  was  on  the  average 
in  1880  about  $36  per  ton,  and  in  1881  about  $31  per  ton. 
In  this  country  during  the  same  years  the  price  averaged 
$67  and  $61  per  ton.  That  is,  consumers  in  this  country 
were  compelled  to  pay  twice  as  much  for  steel  rails  as 
they  paid  in  England.  Any  thing  which  increases  the 
cost  of  railroad-building  tends  to  increase  the  cost  of 
transportation ;  and  a  tax  of  this  kind  eventually  comes 
out  of  the  pockets  of  the  people  in  the  shape  of  higher 
railroad-charges  for  carrying  freight  and  passengers.  The 
domestic  producers  of  steel  rails  secured  enormous  profits, 
of  one  hundred  per  cent,  and  more  on  their  capital,  during 
these  years.  These  profits,  as  is  always  the  case,  caused 
a  great  extension  of  production.  The  men  who  had 
made  so  much  money  out  of  Bessemer  steel  in  1879-81 
put  this  money  very  largely  into  establishments  for 
making  more  steel.  New  works  were  erected  in  all  parts 
of  the  country.  At  the  same  time  the  demand  fell  off, 
in  consequence  of  the  check  to  railroad-building ;  and  the 
increased  supply,  joined  to  the  small  demand,  caused 


70  HISTORY  OF  THE  EXISTING  TARIFF. 

prices  here  to  fall  almost  to  the  English  rates.  But 
during  the  years  of  speculation  and  railroad-building  the 
tariff  had  yielded  great  gains  to  makers  of  steel  rails  ;  and 
popular  feeling  against  this  state  of  things  was  so  strong 
that  in  1883  Congress  felt  compelled,  as  we  shall  see,  to 
make  a  considerable  reduction  in  the  duty.1 

Still  another  case,  and  one  which  bears  some  resem- 
Marble  1864  D^ance  to  tne  woollen  act  of  1867,  is  to  be 
and  1870.  found  in  the  change  of  the  duty  on  marble, 
which  was  made  in  1870.  The  duty  on  marble  had 
been  put  in  1864  at  fifty  cents  per  cubic  foot,  and 
twenty  per  cent,  in  addition.  This,  it  may  be  remarked, 
is  one  of  the  not  infrequent  cases  in  which  our  tariff 
has  imposed,  and  still  imposes,  both  ad-valorem  and 
specific  duties  on  the  same  article.  No  compensating 
principle,  such  as  is  found  in  the  woollen  schedule,  ex- 
plains most  of  these  mixed  duties ;  and  it  is  hard  to 
find  any  good  reason  for  retaining  them,  and  giving  the 
customs  authorities  the  task  of  assessing  the  duty  both 
on  value  of  the  article  and  on  its  weight  or  measure. 
The  cause  of  their  retention,  there  can  be  little  doubt,  is 
that  they  serve  to  conceal  the  real  extent  of  the  duties 
imposed.  The  duty  on  marble,  for  instance,  had  been 
thirty  per  cent,  in  1861,  and  had  been  raised  to  forty  per 

1  The  effect  of  the  steel-rail  duty  is  discussed  more  in  detail  in  Mr.  J. 
Schoenhof's  "  Destructive  Influence  of  the  Tariff,"  ch.  vii.     On  the  profits- 
made  by  the  manufacturers,  see  Mr.  A.  S.    Hewitt's  speech  in  Congress, 
May,   16,   1882,   Congress.   Record,   pp.   3980-83  ;    also   printed  separately. 
Cf.  infra,  p.  94,  and  figures  of  production,  prices,  etc.  in  Appendix,  VI. 


HOW  DUTIES  WERE  RAISED.  71 

cent,  in  1862.  The  mixed  duty  put  on  in  1864  was 
equivalent  to  eighty  per  cent,  and  more.1  A  direct  in- 
crease of  the  duty  from  forty  to  eighty  per  cent,  would 
hardly  have  been  ventured  on  ;  but  the  adoption  of  the 
mixed  duty  veiled  the  change  which  was  in  fact  made. 
One  would  have  supposed  that  this  rate  of  eighty  per 
cent,  would  have  sufficed  even  for  the  most  ardent  sup- 
porter of  home  industries  ;  but  in  1870  a  still  further 
increase  was  brought  about.  It  was  then  enacted  that 
marble  sawed  into  slabs  of  a  thickness  of  two  inches  or 
less  should  pay  twenty-five  cents  for  each  superficial 
square  foot,  and  thirty  per  cent,  in  addition  ;  slabs  be- 
tween two  and  three  inches  thick  should  pay  thirty-five 
cents  per  square  foot,  and  thirty  per  cent.  ;  slabs  between 
three  and  four  inches  thick  should  pay  forty-five  cents 
per  square  foot,  and  thirty  per  cent.;  and  so  on  in  propor- 
tion. Marble  more  than  six  inches  thick  paid  at  the  old 
rate  of  fifty  cents  per  cubic  foot,  and  twenty  per  cent.  It 
is  evident  that  the  change  made  in  the  duty  on  marble  in 
slabs  caused  a  great  increase.  The  duty  on  the  thinnest 
slabs  (two  inches  'or  less  in  thickness)  became  $1.50  per 
cubic  foot,  and  thirty  per  cent,  in  addition  ;  this  same 

1  The  duty  of  1864  was  fixed,  as  Mr.  Morrill  then  explained,  in  accord- 
ance with  an  arrangement  made  between  the  importing  merchants  and  ' '  the 
gentlemen  in  Washington  in  the  marble-quarry  interest. "  The  latter  were 
Mr.  Merrill's  constituents.  It  did  not  seem  to  occur  to  that  gentleman  that 
the  persons  who  were  to  pay  for  the  marble  should  be  regarded  at  all. 
Originally  Mr.  Morrill  had  even  proposed  a  duty  of  seventy-five  cents  per 
cubic  yard,  with  twenty  per  cent,  in  addition.  See  Congr.  Globe,  1863-64, 
pp.  2746-2747. 


72  HISTORY  OF  THE  EXISTING  TARIFF. 

marble  had  hitherto  been  admitted  at  fifty  cents  per 
cubic  foot,  and  twenty  per  cent.  The  new  rates  of  1870 
have  been  equivalent  to  between  100  and  150  per  cent,  on 
the  value,  and  have  been  practically  prohibitive.  The 
effect  of  the  marble  duty  and  of  the  change  made  in  it  in 
1870  can  be  understood  only  by  those  who  know  the  cir- 
cumstances under  which  marble  is  produced  and  imported 
in  this  country.  The  only  marble  imported,  and  that 
which  alone  is  affected  by  the  duty,  is  fine  marble  used 
for  ornamental  purposes  in  mantel-pieces,  furniture,  grave- 
stones, etc.  Such  marble  comes  into  use  very  largely  in 
the  shape  of  slabs  of  a  few  inches  in  thickness.  The 
marble  is  imported,  notwithstanding  the  heavy  duty,  from 
Italy,  whence  it  is  brought  cheaply  by  ships  that  have 
taken  out  grain  and  other  bulky  cargoes.  It  is  produced 
in  the  United  States  in  a  single  district  in  Vermont.  The 
owners  of  the  marble  quarries  in  this  district  have  their 
product  raised  in  price  almost  to  the  extent  of  the  duty  of 
eighty  or  150  per  cent.  The  result  has  been  to  make 
these  quarries  very  valuable  pieces  of  property,  and  to  put 
very  handsome  profits  into  the  pockets  of  their  owners ; 
profits  which  represent  practically  so  much  money  which 
Congress  has  ordered  those  who  use  ornamental  marble 
to  pay  over  to  the  quarry-owners.1 

Wool  and  woollens,  copper,  steel  rails,  marble,  which  we 
have  now  considered,  are  sufficient  examples  of  the  man- 

1  In  regard  to  the  duty  on  marble,  see  "  Tariff  Commission  Report,"  pp. 
227,  1560,  1648. 


HOW  DUTIES  WERE  RAISED.  73 

ner  in  which  duties,  already  raised  to  high  figures  during 
the  war,  were  still  further  increased  after  the  war,  for 
the  benefit  of  the  domestic  producers.  Other  instances 
could  be  given  in  which  an  equal  disregard  other 
of  the  consumer  and  taxpayer  has  been  examples, 
shown.  The  duty  on  flax,  the  raw  material  flax>  mcke1' 
of  a  manufacture  not  over-prosperous,  had  been  $15  per 
ton  in  1864;  in  1870  it  was  raised  to  $20  on  undressed 
flax,  and  to  $40  on  dressed  flax.  Nickel  had  been 
admitted  free  of  duty  in  1861,  and  had  paid  only  fifteen 
per  cent,  by  the  act  of  1864.  In  1870  the  duty  was  sud- 
enly  made  thirty  cents  per  pound,  or  about  forty  per 
cent,  on  the  value.  Nickel,  like  marble,  is  produced  in 
only  one  locality  in  this  country.  There  exists  a  single 
nickel  mine,  in  Pennsylvania,  owned  by  a  well-known  ad- 
vocate of  protection,  and,  with  the  aid  of  the  tariff,  this 
mine,  doubtless,  has  yielded  the  owner  very  handsome  re- 
turns.1 Examples  need  not  be  multiplied.  Enough  has 

1  Mr.  Joseph  Wharton,  of  Philadelphia,  is  the  owner  of  the  nickel  mine. 
Mr.  Wharton  has  also  been  largely  interested  in  Bessemer  steel-works.  There 
can  be  no  impropriety  in  mentioning  his  name,  as  he  has  publicly  advocated 
not  only  the  general  doctrine  of  protection,  but  also  the  retention  of  the 
duties  on  nickel  and  steel.  See  "Tariff  Com.  Report,"  pp.  201-204;  and 
ibid.,  219,  393,  in  regard  to  the  effect  of  the  duty  on  nickel.  Cf.  Mr.  Wharton's 
pamphlet,  "  The  Duty  on  Nickel,"  Philadelphia,  1883  ;  and  Mr.  D.  A.  Wells's 
remarks  on  this  pamphlet  in  Princeton  Review,  July,  1883,  pp.  8-n.  See 
also  "Mineral  Resources  of  the  United  States,"  p.  405.  Mr.  Wharton  is 
the  founder  of  the  Wharton  School  of  Finance  and  Economy,  in  Philadel- 
phia, in  which  protectionist  doctrines  are  taught.  Indeed,  Mr.  Wharton, 
when  giving  the  money  for  founding  the  school,  stipulated  that  the  profes- 
sors should  teach  "ho\v,  by  suitable  tariff  legislation,  a  nation  *  #  *  may 
keep  its  productive  industry  alive,  cheapen  the  cost  of  commodities,  and 


74  HISTORY  OF  THE  EXISTING  TARIFF. 

been  said  to  show  how  the  tendency  toward  high  duties, 
which  was  caused  by  the  war,  continued  after  the  war 
ceased,  and  how  this  tendency  was  taken  advantage  of 
by  the  home  producers  in  order  to  obtain  a  degree  of 
protection  which,  under  ordinary  circumstances,  they 
would  not  have  dreamed  of  asking. 

No    excuse    can    be    found    for    the     great    increase 
of    duties    on  wool   and  woollens,  on  copper, 

Character  of 

these  and  on  the  other  articles  which  have  been 
measures,  dealt  with  in  the  present  chapter.  That  duties 
were  greatly  increased  during  the  course  of  the  war,  and 
in  many  cases  increased  wantonly  and  unnecessarily, 
may  be  explained  and  in  some  degree  excused  by  the 
imperative  need  of  heavy  taxation  at  that  time,  and 
by  the  impossibility  of  avoiding  mistakes  and  incongrui- 
ties in  the  hurried  passage  of  a  complicated  mass  of 
legislation.  The  retention  of  these  "war  taxes,  heavy 
and  often  exorbitant  as  they  were,  for  twenty  years 
after  the  occasion  for  them,  had  passed,  is  not  indeed  to 
be  defended,  but  it  may  be  reasonably  explained.  The 
pressure  of  other  problems,  the  fear  of  infringing  on 
vested  rights  and  interests,  the  powerful  opposition  which 
is  always  met  in  withdrawing  public  bounty  when  once  it 
has  been  conferred,  may  explain  the  failure  to  reduce  the 
war  duties  on  grounds  which,  if  not  sufficient,  are  at  least 
not  unbecoming  to  our  public  life.  But  for  the  additions 

oblige  foreigners  to  sell  it  at  low  prices,  while  contributing  largely  toward 
defraying  the  expense  of  its  government."  The  quotation  is  from  the  letter 
of  gift. 


HOW  DUTIES  WERE  RAISED.  75 

to  the  protective  system  that  were  made  by  measures  like 
the  woollens  act  of  1867  and  the  copper  act  of  1869,  no 
explanation  can  be  given  that  does  not  reflect  in  some 
degree  on  the  good  name  and  the  good  faith  of  the 
national  legislature.  Such  measures  can  be  accounted  for 
only  when  we  call  to  mind  that  our  public  life  was 
demoralized  during  the  years  immediately  following  the 
war ;  that  jobs  were  plenty  and  lobbyists  powerful ;  that 
some  Congressmen  thought  it  not  improper  to  favor 
legislation  that  put  money  into  their  own  pockets,  and 
many  thought  it  quite  proper  to  support  legislation  that 
put  money  into  the  pockets  of  influential  constituents. 
The  measures  which  we  have  been  considering  were  by  no 
means  the  most  conspicuous  or  the  worst  results  of  this 
state  of  things.  Bribery,  direct  or  indirect,  is  not  likely  to 
have  been  used  to  affect  tariff  provisions  ;  it  certainly  can 
have  had  little  influence  on  legislation.  Contributions^ 
to  the  party  chest  are  the  form  in  which  money  payments 
by  the  protected  interests  are  likely  to  have  been  made,  so 
far  as  such  payments  were  made  at  all.  But  the  general 
laxity  of  thought  on  public  trusts  undoubtedly  made 
possible  the  manipulation  of  the  tariff  in  the  interest 
of  private  individuals.  The  tone  of  political  life,  as 
indeed  that  of  commercial  life,  was  lowered  by  the 
abnormal  economic  conditions  that  followed  the  war; 
and  the  general  demoralization  enabled  the  protected 
interests  and  their  champions  to  rush  through  Congress 
measures  which,  in  a  more  healthy  state  of  public  affairs, 
would  have  been  reprobated  and  rejected. 


CHAPTER   IV. 

THE  TARIFF   ACT   OF    1883. 

IN  the  preceding  chapters  the  tariff  has  been  discussed 
independently  of  the  act  of  1883.  That  act,  aside  from 
the  abortive  horizontal  reduction  of  1872,  made  the  first 
general  revision  since  the  Civil  War.  It  has  been  as- 
sumed, in  our  discussion  of  the  legislation  previous  to 
1883,  that  the  revision  was  not  so  complete,  and  the 
change  made  in  the  course  of  it  not  sufficiently  great,  to 
affect  the  substantial  truth  of  the  statement  that  the  war 
duties  are  still  retained  as  the  basis  of  our  tariff  system. 
It  remains  to  justify  this  assumption  by  examining  in 
some  detail  the  act  of  1883. 

The  history  of  the  passage  of  the  act  is  so  recent  and 
familiar  that  only  the  salient  events  need  be  recalled. 
After  the  crisis  of  1873  little  or  nothing  was  heard  for  a 
while  about  the  tariff  ;  and  so  habituated  had  the  public 
become  to  the  extreme  protective  regime  that  the  demand 
for  its  reform  met  with  little  support.  The  subject  was 
again  made  prominent,  after  having  attracted  little  atten- 
tion for  several  years,  by  the  redundant  revenue  which  was 
the  consequence  of  the  revival  of  trade  in  1879  an<^  tne 
subsequent  years.  The  connection  between  tariff  legisla- 

76 


THE  TARIFF  ACT  OF  1883.  77 

tion  and  the  state  of  the  revenue  has  indeed  been  curi- 
ously constant  in  our  history.  In  1842  an  empty  treasury 
was  followed  by  the  passage  of  a  high  protective  tariff. 
In  1857  an  overflowing  revenue  caused  a  reduction  of  the 
duties.  In  1861  the  Morrill  tariff  was  passed,  partly  in 
order  to  make  good  a  deficit.  During  the  war  the  need 
of  money  alone  made  possible  the  act  of  1864.  The 
ten  per  cent,  reduction  of  1872  was  called  out  Agitation 
largely  by  the  redundant  revenue ;  its  abolition  on  the  tariff 
in  1875  was  excused  by  the  falling  off  in  the 
government  income.  In  recent  years  the  surplus  has 
been  on  the  average  about  a  hundred  millions  a  year,1 
and  the  demand  for  a  reduction  in  the  tariff  rates  has 
become  steadily  stronger. 

In    1882    a  protectionist   Congress   passed   an    act    for 
the    appointment     of     a    Tariff    Commission,       Tariff 
which   was   to   report  at  the  next  session  of  Commission 
Congress  what  changes   it   thought  desirable. 
Of   the  gentlemen  appointed  by  the  President  on  this 
commission  a  majority  were   advocates  of   high  protec- 
tion ;  while  no  member  could  be  said  to  represent  that 
part    of   the  public   which  believed   a   reduction  of   the 
protective   duties  to  be  desirable.     Mr.  John  L.   Hayes, 

1  The  surplus,  after  paying  all  expenses  and  interest  on  the  public  debt, 
was : 

In  the  fiscal  year  1880 $65,883,000 

"  "          1881 100,069,000 

1882          .         .         .         .         .         145,543,000 

1883 132,879,000 

1884 104,393,000, 

(under  the  act  of  1883). 


78  HISTORY  OF  THE  EXISTING  TARIFF. 

the  secretary  of  the  Wool  Manufacturers'  Association, 
was  president  of  the  commission.  Its  report  was  laid 
before  Congress  at  the  beginning  of  the  session  of  1882-83. 
At  first  no  action  on  this  report  or  on  the  tariff  seemed 
likely  to  be  taken  ;  for  the  House,  in  which  revenue  bills 
must  originate,  was  unable  to  agree  on  any  bill.  But  the 
House,  having  passed  a  bill  for  the  reduction  of  some  of 
the  internal  taxes,  the  Senate  tacked  to  this  bill,  as  an 
amendment,  a  tariff  bill  based,  in  the  main,  on  the  recom- 
mendations of  the  Tariff  Commission.  When  this  bill 
came  before  the  House  the  protectionists  again  succeeded, 
as  in  1872,  in  obtaining  a  parliamentary  victory.  By  an 
adroit  manoeuvre  they  managed  to  have  it  referred  to  a 
conference  committee.1  In  this  committee  the  details  of 
the  tariff  act  were  finally  settled  ;  for  the  bill,  as  reported 

1  This  manoeuvre  was  a  curious  example  of  the  manner  in  which  the  rules 
of  Congress  are  manipulated  in  order  to  affect  legislation.  A  two-thirds 
vote,  by  the  existing  rules,  was  required  to  bring  the  Senate  bill  before  the 
House.  A  two-thirds  majority  in  favor  of  the  bill  could  not  be  obtained  ; 
though  it  was  probable  that  on  a  direct  vote  a  majority  in  its  favor  could  have 
been  got.  The  protectionists  wished  to  have  the  bill  referred  to  a  confer- 
ence committee,  which  would  probably  act  in  the  direction  desired  by  them. 
For  this  purpose  a  resolution  was  introduced  by  Mr.  Reed,  of  Maine,  pro- 
viding for  a  new  rule  of  the  House,  by  which  a  bare  majority  was  to  have 
power  to  take  up  a  bill  amended  by  the  Senate  for  the  purpose  of  non-con- 
currence in  the  Senate  amendments,  but  not  for  the  purpose  of  concurrence. 
By  the  passage  of  this  rule  a  majority  of  the  House  could  take  up  the  tariff 
bill,  and  then  refuse  to  concur  in  the  Senate  amendments  ;  but  under  this 
rule  the  amendments  could  not  be  concurred  in.  There  was,  consequently, 
no  possibility  of  passing  the  tariff  bill  in  the  shape  in  which  it  came  from  the 
Senate.  The  bill  had  to  be  referred  to  a  conference  committee  ;  and  in  that 
committee,  as  the  text  states,  the  details  of  the  bill  were  settled.  The  Reed 
rule,  though  made  a  permanent  rule  of  the  House,  was  passed  merely  in  order 
to  attain  this  object. 


THE  TARIFF  ACT  OF   1883.  79 

to  the  Senate  and  House  by  the  conferees  of  the  two 
bodies,  was  passed  by  them  and  became  law.  Act  of  1883; 
The  object  of  the  manoeuvre  was  to  check  the  how  passed, 
reduction  of  duties  as  it  appeared  in  the  Senate  bill; 
and  this  object  was  attained.  The  changes  made  by  the 
conference  committees  were,  as  a  rule,  in  a  protectionist 
direction.  The  duties  on  a  number  of  articles  were 
raised  by  the  committee  above  the  rates  of  the  Sen- 
ate bill,  and  even  above  the  rates  which  the  House 
had  shown  a  willingness  to  accept.  The  consequence 
was  that  the  tariff  act,  as  finally  passed,  contained  a 
much  less  degree  of  reduction  than  the  original  Senate 
bill ;  and  it  was  passed  in  the  Senate  only  by  a  strict 
party  vote  of  32  to  31,  while  the  original  Senate  bill 
had  been  passed  by  a  vote  of  42  to  19.' 

1  Mr.  Morrison  said,  in  the  last  session  of  Congress  (.1883—84),  in  com- 
menting on  the  act  of  1883  •  "  The  office  and  duty  of  a  conference  commit- 
tee is  to  adjust  the  difference  between  two  disagreeing  Houses.  This  House 
had  decided  that  bar-iron  of  the  middle  class  should  pay  $20  a  ton  ;  the 
Senate  that  it  was  to  pay  $20. 16  a  ton.  The  gentlemen  of  the  conference 
committee  reconciled  this  difference — how  ?  By  raising  bar-iron  [of  this 
class]  above  both  House  and  Senate  to  $22.40  a  ton.  The  Tariff  Commis- 
sion reported  that  the  tariff  on  iron  ore  should  be  50  cents  a  ton.  The 
Senate  said  it  should  be  50  cents  a  ton.  The  House  said  it  should  be  50 
cents  a  ton.  Gentlemen  of  the  conference  committee  reconciled  the  agree- 
ment of  the  House,  Senate,  and  Tariff  Commission  into  a  disagreement,  and 
made  the  duty  on  iron  ore  75  cents  a  ton.  The  gentlemen  of  the  confer- 
ence did  a  similar  service  for  the  great  corporation  of  corporations,  the  Iron 
and  Steel  Association,  by  giving  it  a  tax  of  $17  on  steel  rails,  which  the 
House  had  fixed  at  $15  and  the  Senate  at  $15.68  per  ton."  Quoted  in  Nel- 
son's "  Unjust  Tariff  Law,"  pp.  22,  23.  Cf.  remarks  to  the  same  effect  by 
Senator  Beck,  who  was  a  member  of  the  conference  committee. — Cong. 
Record,  1883-84,  p.  2786. 

The  conferees  for  the  Senate  were   Messrs.   Morrill,  Sherman,  Aldrich, 


80  HISTORY  OF  THE  EXISTING  TARIFF. 

In  taking  up  the  provisions  of  the  act  of  1883,'  it 
will  be  best  to  consider  first  those  cases  in  which  an 
increase  in  the  duties  has  been  made.  For,  unex- 
pected as  it  may  be  to  the  reader  of  the  preceding- 
pages,  the  act  of  1883  contains '  a  number  of  sections 
in  which  protective  duties  have  been  advanced  above 

Duties  the  rates  °f  preceding  acts;  and  these  sec- 
raised  in  tions  are  very  instructive  when  we  try  to 
make  out  the  general  character  of  the  new 
act.  To  begin  with,  the  duties  on  certain  classes  of 
woollen  goods  have  been  raised.  On  most  woollens 
the  figures  have  been  lowered ;  though,  as  will  be  seen, 
the  reduction  in  these  cases  has  not  been  such  as  to 
bring  any  benefit  to  consumers.  But  on  certain  classes 
of  woollens,  on  which  a  reduction  of  duty,  if  made, 
would  have  been  of  benefit  to  consumers,  the  duties 
have  not  been  reduced,  but  advanced.  This  is  the  case 
Woollen  with  dress  goods  made  wholly  of  wool.  Under 

dress  goods.    the   act    Qf    lg6;7  such    goods   had    paid    a   maxi_ 

mum  duty  of  eight  cents  per  yard  and  forty  per  cent. 
It  will  be  observed  that  the  forty  per  cent,  rate  on  these 
goods  had  already  been  above  the  general  ad-valorem  duty 

Bayard,  and  Beck  ;  for  the  House,  Messrs.  Kelley,  McKinley,  Haskell, 
Randall,  and  Carlisle.  All  but  three  (Bayard,  Beck,  and  Carlisle)  were 
strong  protectionists. 

1  In  the  appendix,  VII.,  the  reader  will  find  a  table  giving  in  detail  the 
old  duties,  those  recommended  by  the  Tariff  Commission,  and  those  now  in 
force,  on  all  articles  mentioned  in  this  chapter.  In  the  document  entitled 
"  Tariff  Compilation,"  printed  by  the  Senate  in  1884,  a  complete  list  of  the 
old  and  new  duties  is  given. 


THE  TARIFF  ACT  OF  1883.  8 1 

of  thirty-five  per  cent,  established  by  the  act  of  1867. 
Nevertheless  the  act  of  1883  increased  the  duty  on  these 
goods  to  nine  cents  a  yard  and  forty  per  cent.  The  Tariff 
Commission  had  even  recommended  twelve  cents  a  yard 
and  forty  per  cent.  Goods  of  this  class  form  the  largest 
single  item  in  the  importations  of  woollens  into  the  United 
States.  They  are  made  to  no  very  great  extent  by  the 
domestic  manufacturers.  The  new  duty  is  intended  to 
enable  the  latter  to  engage  profitably  in  making  them  ; 
since  the  old  duty,  though  it  amounted  in  all  to  more 
than  sixty-five  per  cent,  on  the  values  of  the  imports,  had 
not  sufficed  for  this  purpose.  No  pretence  was  made 
that  this  increase  in  the  specific  duty  was  necessary  to 
give  more  effective  compensation  for  the  wool  duty ;  in 
fact,  as  we  shall  see,  the  duty  on  wool  was  slightly 
lowered,  so  that  the  compensating  duty,  if  changed  at  all, 
should  have  gone  down.  The  new  duty  was  simply  a 
concession  to  the  demand  of  the  manufacturers  for  still 
further  protection  on  one  of  the  few  articles  on  which 
the  previous  rates  had  still  permitted  foreign  competi- 
tion.1 

Next  to  dress  goods,  such  as  were  discussed  in  the 
preceding  paragraph,  the  class  of  woollens  of  which 

1  The  Tariff  Commission,  in  its  "Report"  (p.  31),  says:  "The  new 
clause  in  relation  to  all-wool  merino  goods  is  a  new  provision,  and  has  in 
view  the  introduction  of  fabrics  never  yet  successfully  made  in  this  country. 
Many  of  these  goods  constitute  staple  fabrics  *  *  *  and  their  manufac- 
ture would  be  a  desirable  acquisition  to  our  national  industry."  Cf.,  on  the 
whole  of  the  new  system  of  wool  and  woollen  duties,  two  articles  in  Bulletin 
Wool  Mf.,  xiii.,  1-13,  89-128. 


82  HISTORY  OF  THE  EXISTING  TARIFF. 

the  importations  are  largest  are  the  finer  grades  of 
cloths  and  cassimeres.  The  importation  of  these  goes  on 
Woollen  steadily  in  large  quantities,  and  the  tariff  tax 
cloths,  on  them  is  felt  with  its  full  weight ;  for,  since 
importation  continues,  it  is  clear,  that  not  only  the 
imported  goods,  but  also  those  of  the  same  kind  made 
at  home,  are  raised  in  price  to  the  full  extent  of  the  duty. 
The  duty  on  them,  like  that  on  dress  goods,  is  one  of 
the  comparatively  few  in  the  woollens  schedule  which 
has  not  been  entirely  prohibitory.  The  production  of 
these  finer  woollens  is  carried  on  in  this  country  only 
to  a  limited  extent.  It  is  not  surprising,  therefore, 
to  find  here  also  a  rise  of  the  rates  in  the  new  act. 
Cloths  are  there  divided  into  two  classes :  those  costing 
more  and  those  costing  less  than  eighty  cents  per 
pound.  The  latter,  costing  less  than  eighty  cents,  are 
admitted,  as  before,  at  an  ad-valorem  duty  of  thirty-five 
per  cent.  But  the  former,  costing  more  than  eighty  cents, 
per  pound,  are  now  made  to  pay  forty  per  cent.  The 
specific  compensating  duty  is  indeed  reduced  somewhat 
in  both  cases,  in  connection  with  the  lower  duties  on  wool, 
which  will  presently  be  discussed  ;  but  the  ad-valorem 
rate,  that  which  is  avowedly  protective,  is  increased. 
A  change  of  almost  the  same  kind  was  made  in  the 
Cotton  duties  on  cotton  goods.  Here  also  the  duty 
goods,  was  lowered  on  the  common  grades  of  goods  ; 
and  on  these  grades,  as  will  be  seen  in  the  following,  the 
reduction  was  again  a  purely  nominal  one,  of  no  benefit 


THE  TARIFF  ACT  OF   1883.  83 

to  the  consumers  and  taxpayers.  But  on  other  grades 
of  cotton  goods,  whose  importation  still  goes  on,  and 
on  which  a  decrease  in  the  duty  would  have  caused 
some  lowering  of  prices  and  some  relief  from  taxation, 
there  was  no  reduction,  but  an  increase.  The  duty  on 
cotton  hosiery,  embroideries,  trimming,  laces,  insertings, 
etc.,  had  been  thirty-five  per  cent,  under  the  old  law. 
In  the  act  of  1883  it  was  made  to  be  forty  per  cent. 
The  duty  of  thirty-five  per  cent,  had  been  imposed  during 
the  war,  in  1864,  at  a  time  when  raw  cotton  was  taxed, 
and  the  manufactured  cotton  also  paid  a  heavy  internal 
tax.  This  rate  remained  unchanged  from  1864  till  1883, 
notwithstanding  the  abolition  of  the  internal  taxes; 
and  now  it  has  even  been  raised  to  forty  per  cent. 
The  importance  of  this  change  is  clear  only  when  we 
know  that  imports  of  cottons  consist  chiefly  of  goods 
of  the  class  on  which  the  duty  is  increased.  The  statistics 
of  former  years  are  so  arranged  that  we  cannot  tell  ex- 
actly how  large  a  proportion  these  goods  bear  to  the  total 
imports  of  cottons  ;  but  it  is  safe  to  say  that  more  than 
half  the  cotton  goods  which  continue  to  be  brought  into 
this  country  from  abroad  will  be  affected  by  the  increase  of 
duty  from  thirty-five  to  forty  per  cent.1 

The  process  by  which  the  protective  system  has  gradu- 

1  The  goods  on  which  the  new  duty  took  effect  are  separately  stated  for 
the  first  time  in  the  statistical  returns  for  1883-84.  From  the  statement  of 
imports  for  the  ten  months  ending  April,  1884  (the  only  statement  the 
writer  has  at  hand),  it  appears  that  out  of  a  total  importation  of  about 
$25,000,000  of  cottons,  not  less  than  $15,000,000  paid  the  new  duty  of  forty 
per  cent. 


84  HISTORY  OF  THE  EXISTING  TARIFF. 

ally  been  brought  to  include  almost  every  article,  what- 
ever  its   character,   whose   production    in   the 
Iron  ore. 

country  is  possible,  is  illustrated  by  the  new 

duty  on  iron  ore.  This,  as  the  crudest  of  raw  mate- 
rials, would  be  admitted  free,  or  at  very  low  rates, 
according  to  ordinary  canons  of  protection.  In  1861  it 

had  paid  a  duty  of   ten   per  cent,  as  an  unenumerated 

• 

article ;  and  this  rate  had  not  been  changed  during 
the  war,  since  the  article  was  not  one  likely  to  be  im- 
ported or  to  yield  revenue.  In  1870,  when  the  protec- 
tive principle,  as  we  have  seen,  was  applied  with  greater 
strictness  in  various  directions,  the  duty  was  raised  to 
twenty  per  cent.  In  recent  years  iron  ore  has  been  im- 
ported in  considerable  quantities  from  Spain  ;  and  now  the 
duty  has  been  raised,  in  the  present  tariff,  to  seventy-five 
cents  per  ton,  or  about  thirty-five  per  cent,  on  the  value. 

Still  another  instance  of  the  advance  of  duties  in  the 
existing  act  is  to  be  found  in  the  rates  on  certain  manu- 
factures of  steel.  Here,  as  has  so  often  happened, 

Steel. 

the  increase  is  concealed  under  what  is  in  ap- 
pearance merely  a  change  in  classification.  The  duties  on 
steel  ingots,  bars,  sheets,  and  coils  had  been,  until  1883, 
those  fixed  in  the  war  tariff  of  1864, — from  two  and  one 
quarter  cents  to  three  and  one  half  cents  per  pound,  varying 
with  the  value  of  the  steel.  The  act  of  1883  apparently 
reduced  these  duties  slightly,  making  them  from  two  to 
three  and  a  quarter  cents  per  pound.  But  previous  to  1 883 
"  steel,  in  forms  not  otherwise  specified,"  had  been  admitted 


THE  TARIFF  ACT  OF   1883.  85 

at  a  duty  of  thirty  per  cent.  Under  this  provision,  which 
had  been  in  force  since  1864,  a  number  of  articles,  like 
cogged  ingots,  rods,  piston-rods,  steamer  shafts,  and  so  on, 
had  paid  only  thirty  per  cent.  The  act  of  1883,  however, 
specifically  enumerated  these  and  other  articles,  and  put 
them  in  the  same  schedule  with  steel  ingots  and  bars, — 
that  is,  compelled  them  to  pay  a  duty  of  from  two  to  three 
and  a  quarter  cents  a  pound.  In  almost  all  cases  these  arti- 
cles now  must  pay  three  and  a  quarter  cents  a  pound, 
which  will  be  a  considerable  advance  over  the  previous  rate 
of  thirty  per  cent.  On  the  newly-enumerated  articles  the 
present  act  causes  an  increase  in  the  duty ;  although;  at 
first  sight,  the  new  schedule  of  steel  ingots,  bars,  etc., 
seems  to  show  a  lowering  of  the  rate. 

In  very  much  the  same  way,  by  means  of  a  change  in 
classification,  an  increase  has  been  brought  about  in  the 
duty  on  files.  These  had  paid,  before  1883,  a  duty  varying, 

according  to  the  length  of  the  files,  from  six  to 

Files, 
ten  cents  per  pound,  and,  in  addition,  thirty  per 

cent.  The  Tariff  Commission  recommended,  and  the  act 
of  1883  established,  a  new  rate  of  from  thirty-five  cents  to 
$2.50  per  dozen.  The  effect  of  the  change  was  to  increase 
the  duty  on  the  small  sizes  of  files.  These  sizes  alone  will 
feel  any  effect  from  the  new  duty.  Under  the  old  duty 
the  importation  of  most  classes  of  files  had  entirely  ceased ; 
but  small  files,  such  as  are  used  chiefly  by  watchmakers, 
continued  to  be  imported  from  Switzerland  and  England. 
On  these  the  new  classification  brought  about  an  increase 


86  HISTORY  OF  THE  EXISTING  TARIFF. 

in  the  duty,  which,  it  is  needless  to  say,  operated  greatly 
to  the  advantage  of  the  domestic  manufacturers  of  the 
article. 

Again,  quicksilver  had  been  admitted  in  previous  years 
Other  fr"ee  °f  duty;  the  act  of  1883,  in  response  to 
articles.  a  demand  from  the  owners  of  the  richest 
mines  in  the  world,  those  of  California,  imposed  on 
this  metal  a  duty  of  ten  per  cent.1  One  of  the  impor- 
tant drag-net  paragraphs  in  the  tariff — "  manufactures, 
articles,  vessels,  and  wares,  not  otherwise  provided  for, 
of  brass,  iron,  lead,  pewter,  and  tins  " — shows  an  increase 
in  the  duty  from  thirty-five  to  forty-five  per  cent.  A 
very  large  number  of  articles,  tools,  and  machinery  of 
various  kinds  are  charged  with  duty  'under  this  clause : 
the  imports  of  manufacturers  of  iron  alone,  on  which 
the  higher  rate  of  forty-five  per  cent,  will  take  effect, 
amounted  in  1883  to  nearly  $3,400,000.  Other  instances 
of  the  same  kind  could  be  found  in  the  new  act ;  but 
enough  have  been  given  to  show  that  the  process  of 
extending  and  increasing  the  protective  duties,  which  was 
traced  in  part  in  the  preceding  chapter,  by  no  means 
ceased  in  the  act  of  1883. 

The  reader  may  be  weary  of  the  dry  figures  of  the 
preceding  paragraphs,  and  especially  of  those  relating  to 
articles  of  little  importance,  like  watchmakers'  files.  It  is 
true  that  the  economic  welfare  of  the  country  is  not  per- 
ceptibly affected  by  an  increase  in  the  duty  on  watch- 

1  See  "  Tariff  Commission  Report,"  pp.  2591-2597. 


THE  TARIFF  ACT  OF   1883.  8/ 

makers'  files  and  by  the  consequent  rise  in  their  price. 
But  the  tariff  contains  a  mass  of  these  duties, 

This  increase 

which,  taken  together,  have  no  small  influence  Of  duties 
on  the  prosperity  of  the  country ;  and  it  is  im-  not  defensi- 
possible  to  understand  the  history  of  the  tariff 
or  its  effects  without  going  more  or  less  into  details 
of  this  kind.  Moreover,  in  regard  to  this  act  of  1883, 
the  many  instances  in  which  duties  have  been  ad- 
vanced deserve  especial  attention,  because  they  throw 
light  on  the  character  of  the  act  and  the  intentions  of 
those  who  passed  it.  That  these  changes  are  not  defen- 
sible on  any  sound  economic  principles  need  not  here  be 
shown.  They  are  to  be  condemned  when  we  look  at 
them  from  the  point  of  view  not  only  of  economic  princi- 
ple, but  of  public  policy  and  public  faith.  The  Tariff 
Commission  was  given  the  task  of  revising  the  tariff 
"judiciously";  its  recommendations  were  declared  to 
contain  a  general  reduction  of  duties  by  twenty  per  cent, 
or  more,  and  the  declared  object  of  the  leaders  of  the 
dominant  party  was  to  bring  about  some  substantial 
relief.  No  one  can  doubt  that  "  reform  "  at  the  present 
time  means  a  reduction,  and  excludes  an  increase  in 
duties,  and  that  the  advance  in  the  rates  on  cottons, 
woollens,  and  other  articles  was  no  part  of  what  the 
public  reasonably  expected  in  the  new  act.  Whatever 
may  be  the  feeling  as  to  the  retention  of  the  existing 
duties,  or  as  to  the  time  and  manner  in  which  reduction 
should  be  made,  public  opinion  with  the  majority  of  the 


88  HISTORY  OF  THE  EXISTING  TARIFF. 

people  may  be  safely  said  to  be  opposed  to  any  further 
growth  of  the  protective  system.  No  rational  and  un- 
prejudiced person  will  deny  that  protection  has  at  least 
been  carried  far  enough  in  our  tariff  system.  Had  the 
higher  duties  of  the  act  of  1883  been  brought  before  Con- 
gress in  a  separate  bill,  there  can  be  no  doubt  that  their 
enactment  would  have  been  impossible.  That  they  were 
in  many  cases  half  concealed  by  means  of  changes  in  clas- 
sification, or  were  coupled  with  apparent  reductions  on 
other  articles  in  the  same  schedules,  shows  that  the  pro- 
tectionists themselves  had  some  fear  of  putting  them 
nakedly  before  the  public.  The  existence  of  changes  of 
this  kind  causes  a  feeling  of  suspicion  as  to  the  new  tariff 
act  as  a  whole.  It  makes  a  doubt  arise  whether  in  those 
cases  where  the  figures  have  been  lowered,  any  thing  has 
really  been  done  that  gives  relief  from  the  burden  of  the 
protective  duties. 

The   schedules    in  the  tariff  which  have   the  greatest 
effect  on  the  welfare  of  the  country  are  those 

Reductions 

of  duty:  fixing  the  duties  on,  iron  and  wool ;  and  to 
wool.  these  we  will  first  give  our  attention.  The 
change  in  the  duty  on  wool  was  sufficiently  simple. 
The  ad-valorem  rate  was  taken  off.  The  duty  of 
1867,  it  will  be  remembered,  had  been,  on  wools  costing 
less  than  thirty-two  cents,  ten  cents  per  pound  and  eleven 
per  cent,  ad  valorem,  and,  on  wools  costing  more  than 
thirty-two  cents,  twelve  cents  per  pound  plus  ten  per 
cent,  ad  valorem.  These  ad-valorem  rates  of  eleven  and 


THE  TARIFF  ACT  OF   1883.  89 

ten  per  cent",  were  taken  off,  and  the  rates  left  simply  at 
ten  and  twelve  cents  per  pound.1  In  regard  to  the  greater 
part  of  the  wools  raised  in  the  United  States,  this  reduc- 
tion is  purely  nominal.  It  leaves  the  duty  on  the  cheaper 
grades  of  wool  raised  in  Texas  and  in  the  Territories  at  a 
point  where  it  is  still  entirely  prohibitory.  That  such  is 
the  case,  has  been  frankly  acknowledged  in  the  official 
mouth-piece  of  the  wool  manufacturers.2  So  far  as  con- 
cerns the  higher  grades  of  wool,  such  as  are  raised  in  Ohio 
and  neighboring  States,  the  reduction  is  a  slight  sub- 
stantial gain.  The  only  objection  is  that  it  does  not  go 
far  enough.  The  duty  on  wool,  notwithstanding  the 
cumbrous  machinery  of  compensating  duties,  undoubtedly 
has  a  hampering  influence  on  the  wool  manufacture,  and 
has  been  an  important  factor  in  confining  this  industry 
within  a  limited  range  that  is  often  complained  of.  Like 

1  The  duty  in  the  act  of  1883  is  ten  cents  on  wool  costing  thirty  cents  or 
less,  and  twelve  cents  on  that  costing  more  than  thirty  cents.  The  change 
(in  the  line  of  division,  according  to  value)  from  thirty-two  to  thirty  cents 
is  not  without  importance  ;  and,  as  far  as  it  goes,  it  evidently  tends  to 
neutralize  the  reduction.  This  is  confessed  in  the  Bulletin  Wool  Mf., 
xiii.,  u,  109. 

The  duty  on  carpet  wool  (ante  p.  47)  was  also  reduced  from  three  and  six 
cents  per  pound  to  two  and  one  half  and  five  cents.  There  is  no  reason 
why  carpet  wool  should  not  have  been  admitted  entirely  free  of  duty,  since 
such  wool  is  hardly  raised  in  this  country  at  all.  (See  ' '  Tariff  Comm.  Report," 
PP-  2335-2338.)  The  retention  of  the  duty  on  it  is  doubtless  explained  by 
the  fact  that  the  compensating  specific  duty  on  carpets,  like  most  of  the  com- 
pensating duties,  in  reality  yields  a  good  deal  of  protection  to  the  manu- 
facturers ;  this  they  are  unwilling  to  give  up  ;  and  they  cannot  retain  it 
without  also  retaining  the  duty  on  carpet  wool,  that  being  the  only  founda- 
tion for  the  specific  compensating  duty. 

aSee  Bulletin  Wool  Mf.,  xiii.,   loo. 


90  HISTORY  OF  THE  EXISTING  TARIFF. 

every  protective  duty,  it  causes  consumers  to  pay  a  tax 
which  does  not  go  into  the  government  coffers,  but  merely 
aids  or  enriches  individuals.  As  a  tax  on  raw  materials, 
it  tends  to  bear  with  heavier  weight  than  would  be  the 
case  with  the  same  duty  on  a  finished  product  ;  since  it  is 
advanced  again  and  again  by  the  wool  dealer,  the  manu- 
facturer, the  cloth  dealers,  the  tailor,  each  of  whom  must 
have  a  greater  profit  in  proportion  to  the  greater  amount 
of  capital  which  the  wool  duty  and  the  higher  price  of 
wool  make  it  necessary  for  him  to  employ.  So  strong 
and  so  clear  are  the  objections  to  duties  of  this  kind  that 
hardly  another  civilized  country,  whatever  its  general 
policy,  attempts  to  protect  wool.1  Moreover,  the  reduc- 
tion of  a  duty  of  this  kind  can  take  place  with  excep- 
tional ease.  Wool  is  not  produced,  as  a  rule,  in  large 
quantities,  by  persons  who  devote  themselves  exclusively 
to  this  as  a  business.  It  is  mainly  produced  by  farmers, 
whose  chief  income  comes  from  other  sources,  and  on 
whom  a  reduction  of  duty  and  a  fall  of  price  would  fall 
with  comparatively  little  weight.3  The  case  is  different 
in  many  branches  of  manufacture,  where  a  considerable 

1  Not  only    England,   but  Germany,  France,   Austria,   and  Italy,    all  of 
whom  maintain  a  more  or  less  protective  tariff,  and  grow  large  quantities  of 
wool,  admit  this  material  free  of  duty. 

2  It  may  be  said  that  this  is  not  the  case  with  the  large  sheep  ranches  of 
the  Western  States  and  Territories.     But  these  ranches,   it  happens,  pro- 
duce the  grades  of  wool  of  which  the  price  is  least  affected  by  the  duty  ;  and 
moreover,  the  production  of  these  wools  has  been  exceptionally  profitable 
(partly  in  consequence  of  the  tariff),  and  such  fall  in  price  as  would  ensue 
could  very  well  be  endured  by  the  producers.     See  "  Tariff  Comm.  Report,'* 
pp.  1782-1785,  and  the  passages  in  Bulletin  Wool  Mf.  already  referred  to. 


THE  TARIFF  ACT  OF   1883.  91 

fall  in  prices  may  produce  an  entire  cessation  of  produc- 
tion and  a  great  disturbance  of  economic  relations,  and 
where  in  consequence  a  reduction  of  protection  must  be 
made  more  gradually  and  carefully.  The  wool  duty  may 
be  reduced  quickly  and  sharply  without  any  great  danger 
of  interfering  harmfully  with  the  established  state  of 
things.  All  economic  experience,  and  more  especially 
the  lessons  of  the  last  few  years,  show  that  such  a  change 
is  likely  to  come  in  the  near  future. 

We  turn  now  to  the  reductions  of  duty  in  the  new  act 
on  woollen  goods,  which  must  follow  from  the 

Woollens. 

lower  duty  on  wool.  It  has  been  seen  that 
the  ad-valorem,  or  protective,  duty  was  not  decreased 
at  all,  and  that  on  the  finer  classes  of  woollens  it  was 
increased  from  thirty-five  to  forty  per  cent.  But  the 
specific,  or  compensating,  duty  was  reduced  from  fifty 
cents  to  thirty-five  cents  a  pound.  The  present  duty  is 
thirty-five  cents  a  pound  and  thirty-five  per  cent,  on 
woollens  costing  less  than  eighty  cents  per  pound,  and 
thirty-five  cents  and  forty  per  cent,  on  woollens  costing 
more  than  eighty  cents.  The  lowering  of  the  specific 
duty  was  in  part  called  for  by  the  reduction  of  the  duty 
on  wool ;  but  the  decrease  is  somewhat  larger  than  the 
reduced  duty  on  the  raw  material  made  necessary.  The 
compensating  duty  in  the  new  act  seems  to  be  fixed  on 
the  assumption  that  no  more  than  three  and  one  half 
pounds  of  wool  are  used  in  making  a  pound  of  cloth ; 
whereas  the  act  of  1867,  it  will  be  remembered,  was 


92  HISTORY  OF  THE  EXISTING  TARIFF. 

framed  on  the  basis  of  four  pounds  of  wool  to  the  pound 
of  cloth.  This  may  be  called  a  tacit  confession  that  the. 
compensating  duty  of  1867  was  excessive;  and  the  new 
arrangement  takes  away  some  of  the  protection  which 
was  formerly  given  by  the  specific  duty.  But  this  change 
is  of  little,  if  any,  benefit  to  consumers.  So  far  as  the 
finer  grades  of  woollens  are  concerned,  it  is  more  than 
offset  by  the  increase  in  the  ad-valorem  duty  from  thirty- 
five  to  forty  per  cent.  So  far  as  the  cheaper  grades  of 
woollens  are  concerned,  it  has  no  real  effect.  The  duty 
on  these  was  prohibitory  before,  and  it  remains  prohibi- 
tory now.  A  reduction  of  a  prohibitory  duty  may  be 
made  and  still  leave  the  rate  so  high  as  to  shut  out  impor- 
tation ;  and  this  is  what  has  been  done.  Such  a  change 
has  no  effect  on  trade  or  prices,  and  brings  no  benefit  to 
consumers.  Precisely  similar  is  the  state  of  things  in  re- 
gard to  flannels,  blankets,  and  similar  goods.  On  these 
also  the  specific  duty  has  been  reduced, — on  the  cheapest 
grades  from  a  rate  of  twenty  cents  a  pound  to  rates  of 
ten  and  twelve  cents.  But  the  new  rates  are  still  high 
enough  to  shut  out  importation,  and  bring  about  no 
change  beyond  that  of  the  figures  on  the  statute-book.1 

1  The  manufacturers  assert  that  the  duties  on  goods  have  been  reduced 
more  in  proportion  than  those  on  wool.  See  Mr.  Hayes's  article  in  Bulletin 
Wool  Mf.,  vol.  xiii.  Complaints  are  particularly  strong  from  the  manufac- 
turers of  yarns,  who  say  that  the  readjustment  of  duties  on  the  new  tariff 
enables  yarns  to  be  imported  from  England  too  easily  ;  and  it  seems  there  is 
ground  for  this  complaint,  to  the  extent  that  on  some  yarns  the  duty,  in  com- 
parison with  the  duty  on  the  wool,  is  too  low. — See  Bureau  of  Statistics 
Report  for  quarter  ending  June,  1884,  pp.  564-566. 


THE  TARIFF  ACT  OF  1883.  93 

Changes  of  precisely  this  kind  are  to  be  found  in 
other  parts  of  the  new  act.  The  rates  on  the  cheap 
grades  of  cotton  goods,  for  instance,  show  a 

.  Cottons. 

considerable  reduction.  On  the  lowest  class 
of  unprinted  goods  the  duty  had  been  five  cents  per 
yard ;  it  is  two  and  one  half  cents  by  the  new  act. 
But  the  old  duty  has  for  many  years  ceased  to  have 
any  appreciable  effect  on  the  prices  of  cotton  goods. 
The  common  grades  of  cottons  can  be  made,  as  a  rule,  as 
cheaply 'in  this  country  as  anywhere  in  the  world;  in 
fact,  some  of  them  are  regularly  exported  in  large  quanti- 
ties.1 If  the  duty  on  such  cottons  were  entirely  abol- 
ished, it  is  probable  that  they  could  not  be  imported ; 
and  it  is  certain  that  a  very  small  duty  would  suffice  to 
shut  out  from  our  market  all  foreign  competitors  in  them. 
Under  these  circumstances  the  lowering  of  the  rate  of 
duty  which  the  new  act  makes,  is  of  no  effect  whatever. 
The  same  holds  good  of  almost  all  the  various  reductions 
in  the  specific  duties  on  plain  and  printed  cotton  goods. 
These  changes  are  in  no  sense  a  reduction  of  taxation. 
On  the  other  hand,  in  the  case  of  the  finer  cotton  goods, 
laces,  trimmings,  etc.,  on  which  a  lowering  of  the  rates 
would  have  brought  about  a  real  relief  from  taxation, 
there  was,  as  we  have  seen,  no  decrease,  but  an  increase 
in  the  new  act. 

The  duty  on  pig-iron  was  reduced  by  the  new  act  from 

1  See  the  remarks  of  the  report  on  the  Cotton  Manufacture,  in  the  volume 
of  the  Census  of  1880  on  Manufactures. 


94  HISTORY  OF  THE  EXISTING  TARIFF. 

$7.00  to  $6.72  a  ton.  This  change  is  insignificant,  hardly 
two  per  cent,  on  the  foreign  price  of  iron.  A 
greater  could  have  been  made  without  danger  of 
any  disturbance  of  the  iron  trade.  So  far  as  it  goes,  it  is  in 
the  right  direction.  The  same  general  remark  is  to  be  made 
of  the  reduction  on  bar-iron,  which,  on  the  ordinary  grade, 
lowers  the  duty  from  one  cent  a  pound  to  eight  tenths 
of  a  cent.  The  reduction  on  bar-iron  is,  indeed,  a  change  of 
the  same  kind  as  the  reduction  on  cottons,  on  woollens, 
and  on  many  other  articles, — it  still  leaves  the  duty  still 
high  enough  to  prevent  any  lowering  of  prices  and  any 
effect  on  trade.1  The  duties  on  the  various  forms  of 
manufactured  iron — hoop,  band,  sheet,  plate  iron,  etc.— 
have  gone  down  in  much  the  same  way.  The  reductions 
were  slight  in  all  cases,  and  often  merely  nominal.  It  is 
safe  to  say  that,  in  general,  the  new  rates  on  iron  and  its 
manufactures  can  have  no  appreciable  effect  on  the  trade 
and  welfare  of  the  country. 

The  duty  on  steel  rails  shows  a  considerable 

Steel  rails.     reduction>      The  old  mte  was  $28>oo  a  ton>  and 

the  rate  now  in  force  is  $17.00.     If  this  change  had  been 
made  four  or  five  years  ago,  it  would  have  been  of  much 

1  A  manufacturer  of  iron,  operating  near  the  sea-shore,  admitted  that  in 
October,  1882, — not  a  time  of  special  depression, — the  price  of  domestic 
bar-iron  was  lower  by  $5.00  than  the  price  for  which  foreign  iron  could  be 
imported  ;  and  that  the  price  in  Pittsburg  was  lower  by  $10.00  than  iron  could 
be  imported  for.  The  change  in  duty  under  the  act  was  one  fifth  of  a  cent 
per  pound,  or  $4.48  per  gross  ton  ;  that  is,  less  than  the  reduction  of  $5.00, 
which  it  was  admitted  that  the  manufacturers  on  the  sea-shore  (not  to  men- 
tion those  of  Pittsburg)  could  "stand."  "Tariff  Comm.  Report,"  pp. 
2458,  2459. 


THE  TARIFF  ACT  OF  1883.  95 

practical  importance ;  but  for  the  immediate  present 
and  possibly  in  the  future,  it  has  no  effect  whatever.  It 
has  already  been  said  that,  after  the  enormous  profits 
made  by  the  steel-rail  makers  in  1879—1881,  the  produc- 
tion in  this  country  was  greatly  increased.  At  the 
same  time  the  demand  from  the  railroads  fell  off}  and 
the  huge  quantities  which  the  mills  were  able  to  turn 
out  could  be  disposed  of,  if  at  all,  only  at  prices  greatly 
reduced.  The  consequence  is  that  the  price  of  rails, 
which  in  1880  was  higher  than  the  English  price  by  the 
full  extent  of  the  duty  of  $28.00,  is  now  comparatively 
little  above  it.1  The  price  here  is  still  above  the  English 
rate;  but  the  difference  is  less  than  $17.00  a  ton;  and 
the  duty  of  that  amount  is  still  sufficient  to  keep  out 
foreign  rails.  The  reduction  of  the  duty  has  therefore 
had  no  effect  on  prices,  and  has  brought  no  immediate 
benefit  to  consumers  ;  and  for  the  present,  like  the  changes 
already  noticed  in  regard  to  cottons  and  woollens,  it  is 
merely  a  lowering  of  the  figures  on  the  statute-book. 
Possibly  in  the  future,  when  railroad  building  is  again 
pushed,  and  the  demand  for  rails  quickens,  it  may  have 
some  effect.  It  will  then  prevent  the  rail-makers'  from 
pushing  their  prices  quite  up  to  the  extravagant  figures 
of  past  years.  The  probability  is,  to  be  sure,  that  this 
could  not  be  done  even  if  the  old  duty  had  been  retained, 
since  the  knowledge  of  the  process  and  the  facilities  for 
production  have  been  so  greatly  extended  within  the  last 

1  See  appendix,  VI. 


g6  HISTORY  OF  THE  EXISTING  TARIFF. 

two  or  three  years.  But  the  change  in  the  duty  at  least 
reduces  one  factor  of  those  that  made  the  great  steel-rail 
"boom  "  of  1880  a  possibility. 

Analogous  in  its  effects  to  the  reduction  on  steel  rails, 
is  that  on  copper.  The  duty  on  this  article  goes 
down  from  five  cents,  the  rate  imposed  in  1869, 
to  four  cents  a  pound.  It  has  been  shown  in  the  preced- 
ing pages  that  the  duty  on  copper  enured  almost  exclu- 
sively to  the  benefit  of  the  owners  of  the  copper  mines  of 
Lake  Superior,  who  were  enabled  by  it  to  combine  and  fix 
the  price  of  copper  without  fear  of  competition  from  abroad. 
The  great  profits  of  their  mines  caused  them  steadily  to  in- 
crease their  product ;  and  although  much  of  their  surplus 
has  been  disposed  of  abroad,  at  prices  lower  than  those 
demanded  at  home,  the  growing  supply  caused  the 
domestic  price  slowly  to  fall.  The  discovery  of  large 
deposits  of  copper,  in  recent  years,  in  Montana  and  Ari- 
zona, and  the  shipment  to  market  of  a  great  deal  of  copper 
from  these  sources,  have  at  the  same  time  broken  the 
monopoly  of  the  Lake  Superior  combination,  and  caused 
the  price  to  go  down  still  further.  Importation  of  copper 
in  any  considerable  quantities  ceased  many  years  ago ;  and 
in  face  of  the  recent  fall  in  the  domestic  price,  imports 
would  not  be  resumed  even  if  a  somewhat  greater  reduc- 
tion of  duty  were  made  than  is  contained  in  the  new  tariff. 
In  the  last  two  or  three  years,  the  domestic  competition  has 
been  so  strong  that  the  price  in  this  country  has  been, 
quality  for  quality,  hardly  three  cents  above  the  price 


THE  TARIFF  ACT  OF   1883.  97 

abroad.1  Under  such  conditions  a  reduction  of  the  duty 
from  five  to  four  cents  a  pound  evidently  has  no  immedi- 
ate effect.  It  is  true  that  the  duty  of  four  cents  a  pound 
still  makes  it  possible  that  in  the  future  a  combination  of 
the  copper  producers  may  again  raise  their  prices  at  the 
expense  of  consumers.  Such  a  result,  it  is  said,  is  far 
from  impossible,  since  the  product  of  the  Western  mines 
is  unsteady,  and  not  unlikely  to  cease  altogether;  which 
would  leave  the  field  free  once  more  to  the  Lake  Superior 
producers.  A  complete  abolition  of  the  duty  on  copper 
could  be  made  now  without  causing  any  appreciable 
disturbance  of  trade,  and  it  would  prevent  for  the  future 
a  repetition  of  the  abuses  of  the  past. 

The  duty  on  marble  in  the  new  act  is  fixed  at  sixty-five 
cents  per  cubic  foot  on  rough  marble,  and  at  other  reduc- 
$1.10  per  cubic  foot  on  marble  sawed,  dress-  tions- 
ed,  and  in  slabs.  This  is  hardly  a  perceptible  decrease 
from  the  compound  duties  which  were  discussed  in 
the  preceding  chapter.3  The  duty  on  nickel  was  put 
at  fifteen  cents  a  pound,  in  place  of  the  previous  duty 
of  twenty  and  thirty  cents  a  pound.  Practically  all 
the  nickel  imported  in  recent  years  has  come  in  at  a 
duty  of  twenty  cents ;  consequently  the  reduction  is  less 
than  it  seems  to  be  on  the  surface.3  It  is  worth  while 
to  note  that  in  both  these  cases  the  Tariff  Commission 

1  See  appendix  V.,  for  complete  tables  of  the  prices,  imports,  and  exports 
of  copper. 

3  See  ante,  p.  70. 

3  See  "  Tariff  Comm.  Report,"  pp.  201,  202. 


98  HISTORY  OF  THE  EXISTING  TARIFF. 

had  recommended  rates  that  would  practically  have 
increased  the  duty.  In  both,  a  sharper  reduction  would 
have  caused  no  disturbance  of  trade  or  of  production. 
Not  a  few  changes  were  made  which  can  be  commended, 
in  the  same  way,  without  any  qualification  except  that 
they  were  exceedingly  moderate.  A  fair  example  of 
these  is  the  reduction  of  the  duty  on  manufactures  of  silk 
from  sixty  to  fifty  per  cent.  In  practice  the  old  duty  had 
been  equivalent  to  not  more  than  fifty  per  cent,  on  the 
actual  value  of  the  goods,  because  of  the  regular  and 
steady  undervaluation  of  silk  imports.  Such  undervalua- 
tions, and  the  concomitant  practice  of  false  invoicing,  are 
the  inevitable  result  of  high  ad-valorem  duties  ;  and  they 
will  probably  continue  to  exist  under  the  new  duty  of  fifty 
per  cent.,  and  will  make  that  again  equivalent  in  fact  to 
forty  or  forty-five  per  cent.  The  silk  manufacturers  of 
this  country  attempted  to  contrive  a  schedule  of  specific 
duties  on  silks ;  but  their  scheme  was  not  satisfactory,  as 
indeed  might  have  been  expected  from  the  greatly  varying 
character  of  the  goods.  The  ad-valorem  method  was 
retained,  with  the  reduced  rate.  The  reduction  is  as  great 
as  could  have  been  expected  under  the  circumstances,  and 
possibly  as  great  as  was  wise  at  so  short  notice.  The 
duty  must  be  still  considered  much  too  high,  whether  we 
look  at  it  from  the  economic,  or  from  the  fiscal  and  ad- 
ministrative point  of  view.1  The  change  in  the  duty  on 
silks  is  perhaps  the  greatest  effective  reduction  in  the  new 

1  On  the  silk  duties,  see  "Tariff  Comm.  Report,"  pp.  2165-2174. 


THE  TARIFF  ACT  OF   1883.  99 

tariff  act.  Others  of  the  same  kind  are  the  lowering  of 
the  rate  on  finer  linens,  from  forty  to  thirty-five  per  cent. ; 
the  decrease  of  the  specific  duty  on  cotton  bagging ;  and 
so  on  with  a  considerable  number  of  articles. 

It  is  interesting  to  note  that  the  duties  on  a  number 
of  agricultural  or  mainly  agricultural  pro-  wheat, 
ducts,  such  as  beef  and  pork,  hams  and  corn>  etc- 
bacon,  lard,  cheese,  butter,  wheat,  corn,  and  oats,  are 
left  unchanged  in  the  act  of  1883.  The  duty  on  bar- 
ley was  somewhat  lowered,  at  the  request  of  the 
brewers  of  beer;  and  that  on  rice  also  was  slightly  re- 
duced. But  almost  all  of  these  products  continue  to  be 
charged  with  the  same  rates  as  in  previous  years.  It  is 
needless  to  say  that  the  duties  on  them  have  no  effect 
whatever,  except  to  an  insignificant  extent  on  the  local 
trade  across  the  Canadian  border.  Articles  such  as  these, 
which  are  steadily  exported,  are  not  affected  by  import 
duties.  The  duties  probably  are  left  unchanged  in  order 
to  maintain  the  fiction  that  the  agricultural  population 
gets  through  them  a  share  of  the  benefits  of  protection. 
It  is  curious  that  the  reductions  in  this  schedule,  on  barley 
and  on  rice,  affect  almost  the  only  products  on  which  the 
duties  in  fact  bring  any  benefit  to  the  agricultural  pro- 
ducer and  any  burden  for  the  consumer. 

Enough   has   been    said   of  the    details    of     General 
the   changes  made   by   the   act   of    1883.     Its     remarks- 
general  character  cannot  easily  be  described.     In  truth, 
it    can   hardly  be   said    to   have   any   general   character. 


100  HISTORY  OF  THE  EXISTING  TARIFF. 

It  is  best  described  as  a  half-hearted  and  unsuccess- 
ful attempt  on  the  part  of  protectionists  to  bring 
about  an  apparent  reform  of  the  tariff.1  That  it  was 
framed  by  men  who  at  heart  were  protectionists,  and 
who  had  no  conviction  that  protection  in  this  coun- 
try had  been  carried  too  far,  or  even  far  enough,  is 
shown  by  the  numerous  cases  in  which,  more  or  less 
openly,  an  increase  in  protective  taxes  was  made.  On 
the  other  hand,  the  desire  to  make  some  concession  to 
the  growing  popular  feeling  against  excessive  duties 
caused  reductions  to  be  made — sometimes  reductions  that 
gave  a  real,  though  slight,  relief  from  the  burden  of  the 
duties,  but  more  often  reductions  such  as  had  little  effect 
other  than  the  change  of  the  figures  on  the  statute-book. 
On  the  whole,  the  changes  have  clearly  not  been  of 
enough  importance  to  affect  the  essential  character  of  our 
tariff  system.  That  system  still  retains,  substantially  un- 
changed, those  high  duties  which  were  imposed  during 
the  war,  and  those  further  protective  duties  which  the 
weakness  of  Congress,  the  general  disorder  of  public 
affairs,  and  the  insistence  of  domestic  producers,  brought 
about  in  the  years  immediately  following  the  war.  It  is 

1  Mr.  John  L.  Hayes,  the  President  of  the  Tariff  Commission,  writing 
more  particularly  of  the  new  duties  on  wool  and  woollens,  said,  shortly  after 
the  passage  of  the  act :  "  Reduction  in  itself  was  by  no  means  desirable  to 
us  ;  it  was  a  concession  to  public  sentiment,  a  bending  of  the  top  and 
branches  to  the  wind  of  public  opinion  to  save  the  trunk  of  the  protective 
system.  In  a  word,  the  object  was  protection  through  reduction.  We  were 
willing  to  concede  only  to  save  the  essentials  both  of  the  wool  and  woollens 
tariff.  *  *  *  We  wanted  the  tariff  to  be  made  by  our  friends." — Bul- 
letin Wool  Mf.,  xiii.,  94. 


THE  TARIFF  ACT  OF   1883.  IOI 

still  such  as,  if  proposed  as  a  new  measure  to  be  deliber- 
ately adopted  in  substitution  for  the  system  in  existence 
in  1860,  would  be  rejected  as  excessive  and  unreasonable. 
The  act  of  1883  has  made  no  change  that  can  be  satis- 
factory to  those  who  oppose  protective  duties  on  principle, 
or  to  that  larger  class  who  believe  that  the  time  has  come 
for  some  modification  of  the  existing  protective  system. 
This  latter  class  now  includes,  it  may  be  assumed  with  a 
good  deal  of  confidence,  a  large  majority  of  the  thinking 
people  of  the  United  States.  It  may  be  that  the  princi- 
ples of  free  trade,  in  their  full  consequences,  would  not 
meet  with  general  acceptance.  But  many  have  a  belief — 
not  very  comprehensible  to  one  trained  in  economic 
reasoning-,  yet  widely  diffused — that,  while  "  moderate  " 
protection  may  be  desirable,  immoderate  duties  like  those 
of  our  present  tariff  are  objectionable.  Many,  again,  who 
would  consent  to  protective  duties  up  to  a  certain  point, 
because  they  yield  needed  revenue  to  the  government, 
desire  them  to  be  reduced  now  that  the  revenue  is  re- 
dundant. For  one  reason  and  another,  the  feeling  against 
the  existing  system  has  become  so  strong  that  the  ex- 
treme protectionists  must  soon  give  way.  In  some  places, 
it  is  true,  where  the  population  is  engaged  very  largely 
in  protected  industries,  the  feeling  maintains  itself  that 
protection  is  always  a  good  thing,  and  that  the  more  of 
it  there  is  the  better.  But  this  is  no  longer  the  controlling 
mood ;  and  it  is  safe  to  say  that  popular  opinion  has 
turned,  and  is  turning  so  strongly  against  the  extreme  of 


102  HISTORY  OF  THE  EXISTING  TARIFF. 

protection  which  we  now  have,  that  a  decided  modifica- 
tion of  it  is  merely  a  question  of  time.  The  act  of  1883 
was  an  attempt  on  the  part  of  the  protectionists  to  make 
such  a  modification,  and.  to  satisfy  the  general  demand  for 
it.  The  attempt  was  not  successful.  The  opportunities 
for  raising  duties  afforded  by  the  passage  of  a  general 
tariff  act  proved  in  many  cases  too  strong  a  temptation 
to  be  resisted  by  domestic  producers  and  by  public  men 
who  had  been  in  the  habit  of  acting  at  the  instance  of 
the  producers.  On  the  other  hand,  the  reductions  were 
so  sparing  that  no  decided  change  was  made,  or  even 
appeared  to  be  made.  The  situation,  therefore,  is  not 
materially  affected  by  the  new  tariff  act.  The  need  of 
reform  and  the  demand  for  reform  are  essentially  the 
same  as  they  were  before  its  passage ;  and  all  experience, 
and  all  the  signs  of  the  times,  point  to  the  conclusion  that 
there  will  be,  in  the  not  distant  future,  a  more  incisive 
change. 


APPENDIX. 


TABLE  I. 

Imports,  Duties,   and  Ratio  of  Imports  to  Duties,   1860-1883. 
(From  the  Statistical  Abstract.} 

00,000  omitted. 
Imports. 


'                                                          x 

Fiscal  Year 
Ending 
June  30 

Free. 

Dutiable. 

Total. 

Duties 
Collected. 

Per  cent,  of 
Duties  on  Du- 
tiable Imports 

Per  cent  of 
Duties  on 
Aggregate 
Imports. 

i860 

73-7 

279.9 

353-6 

52.7 

19.67 

15.67 

i 

7I.I 

218.2 

289.3 

39-0 

18.84 

14.21 

2 

52.7 

136.6 

189.4 

46.5 

36.20 

26.08 

3 

35-2 

208.  1 

243-3 

63-7 

32.62 

28.28 

4 

41.1 

275-3 

316.4 

96-5 

36.69 

32.04 

5 

44-5 

194.2 

238.7 

80.6 

47.56 

38.46 

6 

59-0 

375-8 

434-8 

I77-I 

48.35 

41.81 

7 

23.1 

372.6 

395-7 

168.5 

46.67 

44.56 

8 

15-2 

342.2 

357-4 

160.5 

48.70 

46.56 

9 

21.6 

395-9 

417.5 

176.6 

47.36 

44.76 

1870 

20.1 

415.8 

435-9 

i9!-5 

47.16 

44-92 

I 

36.6 

483.6 

520.2 

202.4 

44-05 

40.47 

2 

47-3 

579-2 

626.5 

212.6 

41-47 

37-94 

3 

144-8* 

497-3 

642.1 

184.9 

38.15 

27.89 

4 

I5I.5 

415.9 

567.4 

160.5 

38.61 

28.29 

5 

146.3 

386.7 

533-0 

154-6 

40.69 

29-37 

6 

140.4 

320.4 

460.8 

145-2 

44.80 

31-25 

7 

140.8 

310.5 

451-3 

128.4 

42.95 

20.20 

8 

I4I.3 

295.8 

437-0 

127.2 

42.81 

29.01 

9 

142.7 

303-1 

445-7 

133-4 

44-95 

30.37 

1880 

208.3 

459-6 

667.9 

182.7 

43-56 

29.12 

i 

202.5 

440.2 

642.7 

193.8 

43-25 

29.79 

2 

210.6 

514-1 

724.6 

216.1 

42.70 

30.18 

3 

207.5 

515.7 

723-2 

2IO.6 

42.65 

30.05 

*  The  abolition  of  the  tea  and  coffee  duties,  and  the  free  admission  of  some  other 
articles,  in  1872,  account  for  the  sudden  increase  of  non-dutiable  imports.     See  p.  30. 

103 


104 


HISTORY  OF  THE  EXISTING  TARIFF. 


This  table  is  taken  from  the  Statistical  Abstract,  and  gives  the  computa- 
tions of  the  Bureau  of  Statistics.  Some  peculiarities  in  it  may  be  worth 
noting.  The  average  rate  on  dutiable  articles  in  1863  is  32.62  per  cent.,  while 
in  1862  the  average  on  dutiable  articles  was  36.20.  Yet,  since  duties  were 
steadily  iucreasing  during  the  war,  one  would  expect  the  rate  to  be  higher 
in  1863  than  in  1862.  The  explanation  must  be  that  a  number  of  articles 
which,  before  1863  had  been  admitted  free,  were  subjected  to  rather  low 
duties  in  that  year,  and  caused  a  lowering  of  the  average  rate  on  dutiable 
articles  ;  or  that  the  importation  of  goods  charged  with  high  rates  was  excep- 
tionally small  in  1863.  Both  causes  may  have  operated. — It  is  to  be  remem- 
bered that,  although  the  Morrill  tariff  act  of  1861  went  in  force  for  the  fiscal 
year  ending  June  30,  1862,  the  average  rate  for  that  year  (36.20  on  dutiable 
goods)  does  not  represent  the  rates  of  the  Morrill  tariff.  During  1861  and 
the  early  parts  of  1862  several  other  tariff  acts  were  passed,  levying  duties 
additional  to  those  of  the  Morrill  act,  and  going  into  force  during  that  fiscal 
year.  The  effect  of  all  these  measures  is  seen  in  the  average  rates  for  the 
fiscal  year  1861—62,  which  consequently  do  not  indicate  the  general  character 
of  the  Morill  tariff. — The  effect  of  the  ten  per  cent,  reduction  of  1872  is 
clearly  seen  in  the  average  rates  of  1873  and  the  subsequent  years. 


TABLE  II. 


Duties  on  Some  Important  Articles,  Raised  during  the  Year,  and 
Retained  without  Reduction  till  1883. 


Articles. 

Duty  under  the    Morrill 
Tariff  of  1861. 

Duty  of  1864  in  Force  in 
1883. 

Books 

15  per  cent. 

25  per  cent. 

Chinaware,  plain 

30 

45 

Cotton  goods,  not  other- 

wise provided  for     . 

30  per  cent. 

35  per  cent. 

Cottons,      coarse,      un- 

bleached 

i  ct.  per  yard. 

5  cts.  per  yard. 

Cotton  spool-thread    . 

30  per  cent. 

6  cts.  per   dozen,   plus 

30  %(—  60  to  7o£). 

Cottons,  fine  printed  . 

4^  cts.  per  square   yard 

5i  cts.   per  square  yard 

plus  10  per  cent. 

plus  20  per  cent. 

Manufactures    of    flax, 

jute,     or    hemp,    not 

otherwise  provided  for 

30  per  cent. 

40  per  cent. 

APPENDIX. 


105 


Articles. 

Duty  under  the  Merrill 
Tariff  of  1861. 

Duty  of  1864  in  Force  in 
1883. 

Glass,  common  window 

I  to  !-£  cts.    per  square 

f  to  4   cts.   per  square 

foot. 

foot. 

Gloves,  of  kid  or  leather 

30  per  cent. 

50  per  cent. 

Bar-iron  1   . 

f  ct.  per  Ib. 

i  to  i-J  cts  per   Ib. 

Iron  rails 

$12  per  ton. 

$14  per  ton. 

Steel,    in   ingots,     bars, 

etc. 

ii  to  2  cts.  per  Ib. 

2|  to  3£  cts.  per  Ib. 

Pig   lead 

i  ct.  per  Ib. 

2  cts.  per  Ib. 

Paper 
Silks       . 

30  per  cent. 
30  per  cent. 

35  per  cent. 
60  per  cent. 

1  On  all  forms  of  bar-iron,  band-,  hoop-,  and  boiler-iron,  on  chains,  anchors,  nails 
and  spikes,  pipes,  etc.,  etc.,  the  duties  of  1864  were  in  force  till  1883. 


TABLE  III. 

Duties   on   Certain  Articles,  Raised  since   1864  above  the    War 

Rates. 


Articles. 

Duty  of  1861. 

Duty  of  1864. 

Duty  as    Fixed    in 
1865-70. 

Bichromate  of  potash 

3c.  Ib. 

3C.  Ib. 

4c.  Ib.  (1875) 

Copper,  ingot  . 

2C.  Ib. 

2£c.  Ib. 

5c.  Ib. 

Flax  

$15  ton 

$15  ton 

$20  to  $40  ton 

Marble  in  slabs     .     . 

30  # 

5oc.    cub.    foot  + 

$1.25    to   $1.50 

20% 

cub.  foot  +  30  % 

Nickel         .     .     . 

Free 

T  £    I/ 

2Oc.  to  3oc.  Ib. 

Steel  rails    .... 

30  % 

45  # 

$28  ton 

Umbrellas  .... 

30$ 

50  to  60$ 

Wooll     . 

3c.  Ib. 

6c.  Ib. 

loc.  Ib.  +  11$ 

Woollens  : 

Carpets  (Brussels)  . 

4oc.  sq.  yd. 

7oc.  sq.  yd. 

44  to  7oc.  sq.  yd. 

+  35  % 

Cloths      .... 

I2c.  Ib.  +25  % 

24c.  Ib.  +  40$ 

5oc.  Ib.  +  35  % 

Dress-goods       .     . 

I2C.  Ib.  +2$?c 

24c.  Ib.  +40$ 

j  6c.sq.  yd.  +  35$ 
\  Sc.sq.  yd.  +40$ 

Flannels  .... 

30$ 

24c.lb.  +  35* 

20  to  SQC.  Ib.  + 

1  See  the  explanation  of  the  wool  duties  at  p.  — 


io6 


HISTORY  OF  THE  EXISTING  TARIFF. 


TABLE  IV. 

Revenue  from  Customs,  Duties,  and  Internal  Revenue,  1861-1883. 
(00,000  omitted.) 


Year. 

Internal  Revenue. 

Customs  Revenue. 

l86l 

None. 

39-6 

2 

" 

49.1 

3 

37-6 

69.1 

4 

109.7 

102.3 

5 

209.5 

84.9 

6 

309.2 

179.0 

7 

266.0 

176.4 

8 

igl.I 

164.5 

9 

158.4 

180.0 

1870 

184.9 

194.5 

i 

I43-I 

206.3 

2 

130.6 

216.4 

3 

"3-7 

188.1 

4 

102.4 

163.1 

5 

IIO.O 

157.2 

6 

116.7 

148.1 

7 

118.6 

131.0 

8 

1  10.  6 

130.2 

9 

113.6 

137.2 

1880 

124.0 

186.5 

i 

135-3 

198.2 

2 

146.5 

220.4 

3 

144.7 

214.7 

TABLE  V. 

Production,  Imports,  and  Exports  of  Copper,  and  Foreign  and 

Domestic  Price. 
(Quantities  in  gross  tons. ) 


Year. 

Domestic 
Product'n. 

Imp 

Copper  in 
Pigs. 

arts. 

Ex- 
ports. 

Price  per  Ib.  in  Cents. 

Difference 
in  Price. 

Copper 
Ore. 

New  York 
LakeCop'r. 

London 
Chili  Bars. 

1875 

18,000 

415 

2,300 

2,280 

23 

18 

5 

6 

19,000 

777 

910 

6,430 

21.5 

I6.5 

5 

7 

2I.OOO 

750 

15 

6,050 

19 

I4.6 

4.4 

8 

21,500 

165 

390 

5,040 

I6.5 

13-5 

3 

9 

23,000 

70 

100 

7,680 

17.5 

12.2 

5-3 

1880 

27,000 

2,350 

2,000 

1,  880 

20 

13-5 

6-5 

i 

32,OOO 

320 

4,420 

2,160 

I8.5 

13.3 

5-2 

2 

41,000 

334 

8,190 

1,490 

18-7 

14.4 

4-3 

3 

52,000 

148 

3,890 

16.1 

13-7 

2-4 

4 

6  mos. 

14-5 

12.1 

2.4 

APPENDIX. 


107 


Figures  up  to  and  including  1882  are  from  Mineral  Resources  of  the 
United  States,  pp.  214,  etseq.  The  production  in  1883  is  the  estimate  of  the 
Engineering  and  Mining  Journal.  The  production  is  for  the  calendar 
year,  the  imports  and  exports  for  the  fiscal  year  (ending  June  3Oth).  The 
annual  average  prices  are  calculated  from  the  monthly  prices  given  in 
Mineral  Resources  till  1882  ;  for  1883  and  the  first  six  months  of  1884  they 
have  been  compiled  independently.  The  figures  given  in  Mineral  Resources 
seem  to  contain  considerable  under-statements,  so  far  as  exports  aie  con- 
cerned. See  Eng.  and  Min.  Journal,  Jan.  26,  1884,  p.  59. 

These  tables  show  the  price  in  New  York  to  have  been  higher  than  that  in 
London  by  from  z\  to  5 \  cents.  In  recent  years  the  great  increase  in  domes- 
tic production  has  forced  down  the  price  here,  and  the  difference  in  price  is 
not  more  than  2.\  cents.  The  better  quality  of  domestic  Lake  copper  would 
cause  it  to  bring  i^  cents  more  than  Chili  bars  under  any  circumstances. 
Cost  of  transportation  (from  London  to  New  York)  is  insignificant.  It  is 
safe  to  say  that  any  difference  in  price  over  and  above  i-J-  cents  per  pound 
could  not  exist  if  it  were  not  for  the  duty  on  copper. 

TABLE  VI. 

Product,  Imports,  and  Foreign  and  Domestic  Prices  of  Bessemer 

Steel  Rails. 


Year. 

Product  in 
U.S.1 

Imports  into 

Us.* 

Average  Price 
in  U.  S.2 

Average  Price 
in  England.3 

Average 
Difference 
in  Price. 

1871 

38,300 

not  given 

91.70 

57-70 

34-00 

2 

94,000 

150,000 

99.70 

67.30 

32.40 

3 

129,000 

160,000 

95-9° 

74.40 

21.50 

4 

145,000 

101,000 

84.70 

57-50 

27.20 

5 

291,000 

18,000 

59-70 

44.10 

15.60 

6 

412,000 

none 

53-10 

37-70 

15.40 

7 

432,000 

" 

43-50 

31.90 

II.  60 

8 

550,000 

*  * 

41.70 

27.20 

14.50 

9 

684,000 

25,000 

48.20 

24.70 

23.50 

1880 

954,000 

158,000 

67.50 

36.00 

31.50 

i 

1,330,000 

249,000 

61.10 

31.20 

29.90 

2 

1,438,000 

182,000 

48.50 

30.00 

18.50 

3 

1,286,000 

38,220 

37-75 

25.40 

12.35 

iS84(Jan.) 

34- 

21.80 

12.  2O 

1  In  net  tons  of  2,000  Ibs.     2  Price  per  gross  ton  of  2,240  Ibs. 

The  figures  of  production  and  importation  are  from  the  Reports  of  the 
American  Iron  and  Steel  Association,  as  are  also  the  prices  in  this  country. 
The  prices  in  England  have  been  compiled  from  the  files  of  the  London 
Economist,  checked  by  occasional  tables  in  the  Iron  and  Steel  Association 


loS 


HISTORY  OF  THE  EXISTING    TARIFF. 


Reports  (<?,  g.t  in  Report  for  1879,  P-  63).  Prices  by  yearly  average  neces- 
sarily indicate  only  the  general  fluctuations;  but  for  purposes  of  general  com- 
parison the  above  are,  I  believe,  trustworthy. 

Cost  of  transportation  varies  from  two  to  four  dollars  per  ton.  The  dif- 
ference in  price  over  and  above  this  sum  represents  the  effect  of  the  tariff 
tax.  It  will  be  noticed  that  in  the  years  of  activity  (e.  g.,  in  1871-72,  and  in 
1880-1)  the  difference  in  price  is  fully  equal  to  the  duty,  which  was  $28.00 
per  ton  till  1883.  In  years  of  depression  the  difference  in  price  is  much  less 
than  the  duty  (e.  g.,  in  1875-78),  and  at  such  times  importation  ceases.  In 
January,  1884,  when  the  duty  was  $17.00  per  ton,  the  price  in  this  country 
was  higher  than  that  in  England  by  $12.20  ;  under  such  circumstances,  im- 
portation must  evidently  cease,  the  duty  being  prohibitory. 

TABLE  VII. 
Changes  of  Duty  in  1883.      /   . 


Article. 

Duty  before  1883. 

Duty  Qy[ceive3)  by 

• 
Duty  of  Act  of 

1883. 

Barley    

150.  bushel 

I^C. 

IOC. 

Copper,  ingot  . 

5c.  lb. 

*  5*** 
40. 

40. 

Cottons,  coarse     .     . 

5c.  sq.  yd. 

3c. 

afe 

"         finer  printed 

si  SCL-  yd-  an(^  2O$ 

6c. 

6c. 

"       mf.  n.  o.  p.1 

35  # 

40$ 

40$ 

Files2     

6  to  loc.  lb.  and 

35c  to  $2.50  doz. 

35c.  to  $2.50 

30  % 

Iron  ore      .... 

2.0% 

5oc.  ton 

75c. 

"pig       .... 

$7.00  ton 

$6.72 

$6.72 

"bar       .... 

ic.  lb. 

AC.  lb. 

AC- 

Linens,  finer    .     .     . 

40  % 

35^ 

35* 

Manufactures  of  iron, 

brass,  lead,  pewter, 

tin,  etc  

35  # 

45  # 

45  # 

Marble,  block      .     . 

5oc.  cub.  ft.  and 

75c.  cub.  ft. 

65c.  cub.  ft. 

20$ 

Nickel    

20.  to  3oc  lb. 

25c.   lb. 

150.  lb. 

Quicksilver      .      .     . 

free 

10$ 

10$ 

Rice,  uncleaned  . 

2C.   lb. 

ifc. 

lie. 

Silks       

60  % 

50$ 

50$ 

Steel,  in  ingots  3  .     . 

z{  to  3^c.  lb. 

2  to  3^c. 

2  to  3{c. 

Wool,  value  under  32c. 

loc.  lb.  and  n# 

IOC. 

IOC. 

Woollens,  dress  goods  4 

(  6c.  yd.  and  35  % 
\  8c.  "      M  40^ 

5c.  and  35  % 
I2c.  and  40  % 

5c.    and  35$  ) 
gc.       '    40  %  f 

"      cloths      .     . 
Flannels,      blankets, 
etc      

50c.  lb.   and  35  % 
20  to  SOG.  lb.  and 

(  3oc.  and  35  % 
\  35c.     "    40$ 
8  to  24c.  and  35  % 

35c.   and  35  %  \ 
35c.      '    40  %  \ 
10    to    24c.    and 

35  # 

35  £     ' 

1  Manufactures  not  otherwise  provided  for,  embroideries,  laces,  trimmings,  etc.,  see 
p.  82.     2  See  p.  85.     3  See  p.  84.     *  See  p.  80. 


INDEX. 


Ad-valorem  duties,  5 
Ad-valorem  duty  on  woollens,  53 
Agricultural  products,  duties  on,  99 

Bar-iron,  duty  of  1883,  94  ;  duty  in  1864-83,  105 
Blankets,  duty  of  1867,  51,  60  ;  of  1883,  92 

Carpets,  duty  of  1867,  51,  60 

Carpet  wool,  duty  of  1867,  47  ;  duty  of  1883,  89 

Coal  duty  reduced,  31  4 

Coffee  duty,  reduced,  25  ;  abolished,  29,  30 ;  policy  of,  32-35 

Combing  wool  in  1867,  58 

Compensating  system,  42 

Compensating  duty  excessive  in  1867,  54-57 

Conference  committee  on  tariff  of  1883,  79 

Copper  duty  of  1869,  65  ;  of  1883,  96 

Copper,  prices,  production,  etc.,  106 

Cottons,  duty  of  1864,  39  ;  of  1883,  82,  93 

Dawes,  on  tariff  act  of  1872,  28,  31 

Files,  duty  of  1883,  85 
Finkelnburg  introduces  bill  of  1872,  28 
Flannels,  duty  of  1867,  51,  60  ;  of  1883,  92 
Flax  duty  increased  in  1870,  73 
Frelinghuysen  on  copper  act  of  1869,  66 

Garfield  on  tariff  in  1870,  24 

Harris,  E.,  quoted,  45 

Hayes,  J.  L.,  action  on  bill  of  1872,  29,  35  ;  President  of  Tariff  Commis- 
sion, 77  ;  on  tariff  of  1883,  100 

109 


110  INDEX. 

Hides  admitted  free,  31 
Horizontal  reduction,  35 

Imports  in  1860-83,  103 

Internal-revenue  act  of  1862,  7  ;  of  1864,  10 

Internal  taxes  abolished,  18 

Iron,  duty  on,  in  1870,  25  ;  in  1883,  93 

Iron-ore  duty,  84 

Marble,  duty  in  1864  and  1870,  70  ;  in  1883,  97 

Metal  manufactures,  duty  raised  in  1883,  86 

Morrill,  on  tariff  of  1861,  6  ;   on  tariff  of  1862,  8  ;   on  tariff  of  1864,  n,  ig 

on  marble  duty,  71  ;  financial  methods  of,  II 
Morrison  bill  of  1876,  37 
Morrison  quoted  on  act  of  1883,  79 

Nickel  duty  increased  in  1870,  73  ;  in  1883,  97 

Pig-iron  duty  reduced  in  1870,  25  ;  in  1883,  93 
Protective  feeling  gradually  arose,  19-24 

Quicksilver,  duty  of  1883,  86 

Reduction  of  duties  after  the  war  neglected,  18 
Reed  rule  of  1883,  78 

Revenue  and  tariff  legislation,  connection  of,  76 
Revenue  duties,  advantageous,  32  ;  abolished,  34 
Revenue  from  customs  and  internal  revenue,  106 
Rice,  on  tariff  of  1861,  5 

Salt  duty  reduced,  31 

Sherman,  on  tariff  of  1861,  6  ;   on  tea  and  coffee  duties  in  1875,  36 

Shrinkage  of  wool,  57 

Silks,  duty  in  1883,  98 

Sinking  fund,  36 

Specific  duties,  5  ;  on  woollens,  53 

Steel  duty  of  1883,  84 

Steel  rails,  duty  of  1870,  67  ;  of  1883,  94  ;  prices,  production,  etc.,  107 

Surplus  revenue  in  1872,  27  ;  in  1880-84,  77 

Syracuse  convention,  44 

Tariff  act  of  1846,  2  ;  of  1857,  3  ;  of  1861,  4  ;  of  1862,  8  ;  of  1864,  10-14 
of  1870,  24  ;  of  1872,  31  ;  of  1875,  36  ;  of  1883,  79,  99,  108 


INDEX.  1 1 1 

Tariff  bill  (unsuccessful)  of  1867,  21  ;  of  1872,  28  ;  of  1876,  27  ;  of  1878,  37 
Tariff  commission  of  1883,  77 

Tea  duty,  reduced,  25  ;  abolished,  29-30  ;  policy  of,  32-35 
Ten-per-cent.  reduction  of  1872,  29-31  ;  repealed  in  1875,  36 

War  legislation,  6,  12  ;  war  duties  maintained,  15,  38 

Wells,  D.  A.,  on  internal  taxes,  10  ;  report  and  bill  of  1867  by,  22,  24  ;  on 

copper  veto  in  1869,  66 

Western  States,  anti-protection  feeling  in,  26 

Wharton,  J.,  on  nickel  duty,  73  ;  founds  Wharton  school  of  economy,  73 
Wheat  duty,  99 
Wood  bill  of  1878,  37 

Wool  and  woollen  act  of  1867,  46,  61  ;  effect  of,  62 
Wool  duty  of  1861,  41  ;  of  1864,  43  ;  of  1867,  47  ;  of  1883,  88 ;  discussed 

in  general,  89 

WToollen  dress  goods,  duty  raised  in  1883,  80 
Woollens,  duty  of  1861,  41  ;  of  1864,  44 ;  of  1867,  49 ;  of  1883,  82,  91 


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